上工申贝(600843)上工股份2003年年度报告

上工股份有限公司 2003 年年度报告 二 00 四年四月 1 重 要 提 示 本公司董事会及其董事保证本报告所载资料不存在任何虚假记载、误导性 陈述或者重大遗漏，并对其内容的真实性、准确性和完整性承担个别及连带责任。 公司董事长倪永刚先生、总经理王立喜先生、财务负责人徐晓晖女士声明： 保证年度报告中财务会计报告的真实、完整。 上工股份有限公司董事会 目 录 第一节 公司基本情况简介 第二节 会计数据和业务数据摘要 第三节 股本变动及股东情况 第四节 董事、监事、高级管理人员和员工情况 第五节 公司治理结构 第六节 股东大会情况简介 第七节 董事会报告 第八节 监事会报告 第九节 重要事项 第十节 财务报告 第十一节 备查文件目录 2 第一节 公司基本情况简介 1、公司简介 （1）公司沿革 公司的前身上海工业缝纫机公司于 1992 年 11 月经上海市经济委员会批准， 由上海工业缝纫机厂、上海缝纫机四厂、上海缝纫机零件厂、上海缝纫机零件四 厂、上海缝纫机零件十厂、上海精工服装机械厂合并组建而成。1993 年 9 月，经 上海市经济委员会“沪经企（1993）405 号文”批准，上海工业缝纫机公司改组 为上海工业缝纫机股份有限公司。 根据一九九六年度股东大会决议, 经报国家工商行政管理局企业注册局 （国）名称变核外字〔1997〕第 042 号文核准，一九九七年八月二十二日上海市 工商行政管理局批准，更名为上工股份有限公司。 （2）经营概况 公司是国内最早专业生产缝制设备的大型骨干企业，也是我国缝制设备的重 要出口生产基地。到 2003 年末累计产销各类工业缝纫机已达 600 多万架、家用缝 纫机近亿架，分别占国内总量的近三分之一和十分之七左右，社会保有量居全国 前茅。"上工牌"和"蝴蝶牌"先后被认定为“中国驰名商标”，是国内同行中唯一 同时拥有两个驰名商标企业，"上工牌"还进入了“中国名牌”产品的行列。公司 已形成了包括平缝机、包缝机、特种机、家用机、绣花机等多系列的产品。最新 开发成功的 GC9000 系列高速无油润滑平缝机代表了当今缝制设备制造业的最新 成果。出口创汇保持稳步增长，是国内同行业中出口额最大的企业之一。产品远 销亚洲、非洲、美洲和欧洲等五十多个国家和地区。 八十年代中期以来，公司曾先后从日本等国引进先进技术和设备，特别是高 速平缝机系列和高速包缝机系列国际合作的成功，使公司产品档次迅速提高，已 达到同行先进水平。公司还十分注重产品质量和科学管理。1993 年就在同行业中 率先推行 ISO9001 质量管理和质量保证体系的认证， 并取得了国际认证机构 （DNV） 和中国国家商检认证中心颁发的证书。 2002 年公司又通过了 ISO9001：2000 换 版认证。 公司是上海市高新技术企业，拥有上海市级技术中心，并正积极创建国家级 技术中心。近年来公司集聚了一批海内外优秀人才，进一步增强了公司的研发能 3 力，已构成同行业领先的人才新高地，显现了人才的集聚效应。 根据国际缝制设备制造业逐步向发展中国家转移的新格局，公司正通过不断 改革和调整，依靠机制创新、产品创新、人才创新和技术创新，进一步发挥多品 种、高品位和配套成线的优势，千方百计地满足国内外用户日益增长的需求。与 此同时，中国入世和服装业的蓬勃发展为公司的进一步发展带来了机遇，正在规 划中的上工机电一体化产业园区，必将加快把公司建成具有国际一流水平，集信 息、研发、生产、销售和培训为一体的机电一体化缝制设备基地。 为了加快实现从“国内领先”向“国际一流”的跨越，公司正积极实施资本 运作与产业升级相结合的发展战略，全面引入先进技术、管理和人才，以早日跨 入世界缝制设备业的先进行列，成为真正具有国际竞争力的强势企业。 2、基本情况 （1）公司法定中文名称：上工股份有限公司 公司英文名称：SHANGGONG CO., LTD. 公司英文名称缩写：SGC （2）公司法定代表人：倪永刚 （3）公司董事会秘书：张一枫 证券事务代表：顾根荣 联系地址：上海市浦东新区世纪大道 1500 号东方大厦 12 楼 联系电话：(021)68407700-617 (021)68407515 传真：(021)63302939 电子信箱：shggg@public3.sta.net.cn （4）公司注册地址：上海市浦东新区罗山路 1201 号 公司办公地址：上海市浦东新区世纪大道 1500 号东方大厦 12 楼 邮政编码：200122 公司网址：http://www.shanggonggroup.com 电子信箱：shggg@public3.sta.net.cn （5）公司选定的信息披露报纸：《上海证券报》及香港《商报》 登载公司年度报告的中国证监会指定国际互联网网址： http://www.sse.com.cn 公司年度报告备置地点：公司董事会办公室 4 （6）公司股票上市交易所：上海证券交易所 股票简称：上工股份（A 股） 上工 B 股（B 股） 股票代码：600843 900924 （7）其他有关资料： ① 公司首次注册登记日期：1993 年 12 月 16 日 登记地点：上海市工商行政管理局 变更注册登记日：1997 年 8 月 22 日 登记地点：上海市工商行政管理局 ② 企业法人营业执照注册号：企股沪总字第 019029 号 ③ 税务登记号码：国税沪字 310048132210544 （8）公司聘请的会计师事务所 境内：上海众华沪银会计师事务所有限公司 办公地址：上海市延安东路 550 号海洋大厦 12 楼 境外：德豪国际会计师事务所 办公地址：上海市延安东路 550 号海洋大厦 12 楼 （9）法律顾问：上海市震旦律师事务所 办公地址：上海市四川北路 1688 号 16 楼 5 第二节 会计数据和业务数据摘要 1. 公司本年度主要经营数据 （单位：人民币元） 利润总额 20,031,894.08 净利润 14,595,602.55 扣除非经常性损益后的净利润 -49,891,385.47 主营业务利润 109,010,168.83 其他业务利润 14,413,400.19 营业利润 -42,678,480.34 投资收益 17,933,050.49 补贴收入 2,518,176.16 营业外收支净额 42,259,147.77 经营活动产生的现金流量净额 -41,963,006.97 现金及现金等价物净增加额 390,777,963.81 注：扣除非经常性损益的项目涉及金额（扣除所得税影响）：补贴收入 2,466,397.68 元，营业外收入 53,489,024.31 元，营业外支出 10,783,593.82 元， 投资收益 10,587,686.39 元，以前年度计提的减值准备冲回 8,727,473.46 元。 2、国际会计准则调整对中国法定财务报表之影响如下： 净利润 净资产 （人民币千元） （人民币千元） 根据中国法定财务报表所列报 14,596 859,868 国际会计准则调整： 补充确认投资损失 （359） - 冲销资本化之费用 294 - 剔除与联营方交易未实现利润 （543） （543） 经国际会计准则调整后所列报 13,988 859,325 6 3. 公司近三年的主要会计数据和财务指标：（合并报告） （单位：元） 2003 年度 2002 年度 2001 年度 项 目 主营业务收入 866,798,366.22 875,299,752.11 916,259,944.36 净利润 14,595,602.55 13,161,566.40 45,840,041.90 总资产 1,735,205,977.66 1,354,455,716.34 1,317,411,199.56 股东权益 （不含少数股 859,868,516.39 514,991,748.36 502,565,328.12 东权益） 每股收益 0.0374 0.0521 0.1816 （摊薄） 每股收益 0.0489 0.0521 0.1816 （加权） 扣除非经常性 损益后的每股 -0.1278 0.0235 0.1619 收益 每股净资产 2.2029 2.0398 1.9906 调整后的每股 2.1779 2.0088 1.9745 净资产 每股经营活动 产生的现金流 -0.1075 0.1121 0.0133 量净额 净资产收益率 1.6974 2.5557 9.1212 （摊薄）% 净资产收益率 2.6202 2.5850 9.4605 （加权）% 扣除非经常性 损益后的 -8.9565 1.1643 8.4342 加权平均净资 产收益率% 报告期利润表附表（按《公开发行证券的公司信息披露编报规则（第九号）要求计算》） 项 目 净资产收益率（%） 每股收益（元） 全面摊薄 加权平均 全面摊薄 加权平均 主营业务利润 12.68 19.57 0.2793 0.3650 营业利润 -4.96 -7.66 -0.1093 -0.1429 净利润 1.70 2.62 0.0374 0.0489 扣除非经常性损 益后的净利润 -5.80 -8.96 -0.1278 -0.1670 7 4、股东权益变动情况： 项 目 股 本 资本公积 盈余公积 其中:法定公益金 未分配利润 股东权益合计 期初数 252,466,370.00 257,092,620.64 12,295,327.80 5,779,351.61 991,046.43 514,991,748.36 本期增加 137,869,958.00 222,753,452.04 10,439,045.92 5,587,835.27 4,156,556.58 本期减少 37,869,958.00 期末数 390,336,328.00 441,976,114.68 22,734,373.72 11,367,186.88 5,147,603.01 859,868,516.39 变动原因（1）资本公积转增 (1)增发 B 股溢价 当年提取数 当年提取数 当年收益增加 （2）增发 B 股 1 亿股（2）转增股本 8 5、业绩图表 出口创汇（百万美元） 主营业务收入(百万元) 1000 866.8 875.3 916.26 46.37 42.56 45.14 50 800 40 600 30 400 20 200 10 0 0 2003年 2002年 2001年 2003年 2002年 2001年 缝纫机产量（万架） 80 71.44 54.14 54.19 55.81 工业机产量 万架 60 45.02 家用机产量 万架 40 32.28 23.53 17.25 总产量 万架 20 9.12 0 2003年 2002年 2001年 出口占销售收入比例% 42 42 40 40 38 38 36 2003年 2002年 2001年 9 第三节 股本变动及股东情况 1、股本变动情况 (1) 公司股份变动情况表（截止 2003 年 12 月 31 日） 单位：股 本次变动前 本次变动增减（+，-） 本次变动后 公积金转股 增发 其他 小计 一、未上市流通股份 1、发起人股份 其中： 国家持有股份 117,018,082 16,272,332 -8,535,874 7,736,458 124,754,540 境内法人持有股份 9,348,288 2,682,624 8,535,874 11,218,498 20,566,786 境外法人持有股份 其他 2、募集法人股 13,000,000 1,950,000 1,950,000 14,950,000 3、内部职工股 4、境内上市外资股 B 股 100,000,000 100,000,000 100,000,000 未上市流通股份合计 139,366,370 20,904,956 100,000,000 120,904,956 260,271,326 二、已上市流通股份 1、人民币普通股 15,600,000 2,340,002 2,340,002 17,940,002 2、境内上市的外资股 97,500,000 14,625,000 14,625,000 112,125,000 3、境外上市的外资股 4、其他 已上市流通股份合计 113,100,000 16,965,002 16,965,002 130,065,002 三、股份总数 252,466,370 37,869,958 100,000,000 137,869,958 390,336,328 （2）股票发行和上市情况 股票类别 发行日期 发行价格 发行数量 上市日期 A股 1993.10.10-11.30 5.80 元/股 2,200 万股 1994.3.11 （其中 1,000 万股法人股） B股 1994.1.8-1.12 3.654 元/股 7,500 万股 1994.1.18 （折合 0.42 美元） 报告期内，公司以 2003 年 6 月 2 日为 A 股股权登记日（B 股股权登记日为 2003 年 6 月 5 日，B 股最后交易日为 2003 年 6 月 2 日），2003 年 6 月 3 日为除 权日，实施了公司 2002 年度股东大会审议通过的“以 2002 年末股本总额 10 252,466,370 股为基数，向全体股东每 10 股转增 1.5 股”的议案，议案实施后，公 司股本增加至 290,336,328 股。 经中国证监会证监发行字[2003]133 号核准，公司向已选定的境外机构投资者 增发不超过 10,000 万股境内上市外资股（B 股），发行日期为 2003 年 11 月 7 日 至 11 月 11 日，发行价格为 0.428 美元/股，发行数量为 10,000 万股。本次发行的 B 股设有锁定期 6 个月，计划于 2004 年 5 月 13 日申请上市流通交易。本次发行 完成后，公司股本增加至 390,336,328 股，增发前后股本结构变化如下： 发行前 发行后 股 份 类 别 股数（股） 比例(%) 股数（股） 比例(%) 一、未上市流通股份 1、发起人国家股 116,245,570 40.04 116,245,570 29.78 2、非发起人国家股 8,508,970 2.93 8,508,970 2.18 3、非发起人国有法人股 20,566,786 7.08 20,566,786 5.27 4、非发起人境内法人股 14,950,000 5.15 14,950,000 3.83 5、境内上市外资股 B 股 100,000,000 25.62 未上市流通股份合计 160,271,326 55.20 260,271,326 66.68 二、已上市流通股份 1、人民币普通股 A 股 17,940,002 6.18 17,940,002 4.60 2、境内上市外资股 B 股 112,125,000 38.62 112,125,000 28.72 已上市流通股份合计 130,065,002 44.80 130,065,002 33.32 三、股份总数 290,336,328 100 390,336,328 100 2、股东情况 （1）年末股东人数 截止 2003 年 12 月 31 日止，本公司在册股东总数 29,017 户。其中：A 股股 东 12,676 户，B 股股东 16,341 户 。 （2）前十名股东持股情况（截止 2003 年 12 月 31 日） 质押或冻结 年末持股 比例 序号 股 东 名 称 年度内增减 股份类别 的股份数量 股东性质 数量 (%) 1 -772,512 未流通 无 国家股 上海轻工控股（集团）公司 116,245,570 29.78 28,037,341 未流通 未知 B股 2 Honour Force Investments Ltd. 28,037,341 7.18 3 11,218,498 未流通 无 国有法人股 上海国际信托投资有限公司 20,566,786 5.27 4 19,500,000 未流通 未知 B股 申银万国证券（香港）有限公司 19,500,000 4.996 12,000,000 未流通 未知 B股 5 NORMAL WIN ASSETS LIMITED 12,000,000 3.07 11 11,000,000 未流通 未知 B股 6 MAIN FORCE ASSETS LIMITED 11,000,000 2.82 7 MESABI ASSETS LIMITED 10,500,000 10,500,000 2.69 未流通 未知 B股 8 上海实业资产管理有限公司 2.38 9,300,000 9,300,000 未流通 未知 B股 （香港） 9 2.18 中国长城资产管理公司 8,508,970 8,508,970 未流通 未知 国家股 10 中国银行上海市分行 715,650 5,486,650 1.41 未流通 未知 社会法人股 （3）持有本公司 10%以上的股东情况简介 ① 上海轻工控股（集团）公司系本公司控股股东，年初持有国家股 117,018,082 股，占本公司总股本比例为 46.35%，报告期内将其所持本公司部分 国家股分别转让给中国长城资产管理公司和上海国际信托投资有限公司，报告期 末持有国家股 116,245,570 股，占本公司总股本比例为 29.78%。 上海轻工控股（集团）公司是经上海市人民政府批准，由上海市轻工业局、 上海市第二轻工业局改制组建的国有独资有限责任公司。1995 年 12 月 27 日经上 海市国有资产管理委员会（沪国资委授[1995]21 号文）授权，统一经营上海轻工 控股（集团）公司国有资产。注册资本：人民币叁拾陆亿伍仟叁佰叁拾万元，法 定代表人：张立平。经营范围：市国资委授权范围内的国有资产经营与管理，实 业投资、国内贸易（除专项规定）。 ② 公司与第(2)至第(10)名股东之间不存在关联关系；未知前十名股东之间 是否存在关联关系及是否属于《上市公司持股变动信息披露管理办法》中规定的 一致行动人。 （4）上述股东名称中，(2)(4)(5)(6)(7)(8)均为特定的境外机构投资者因认购 公司增发的 B 股而列入前十名股东名单，他们所持公司本次发行的 B 股有 6 个月 锁定期， 即自 2003 年 11 月 13 日公司 B 股发行完毕之日起至 2004 年 5 月 12 日止。 （5）前十名流通股股东持股情况（截止 2003 年 12 月 31 日） 12 序号 股东名称（全称） 年末持有 种类（A、B、H 股或其它） 流通股数量（股） 1 CBNY S/A PNC/SKANDIA SELECT 1,417,110 B股 FUND/CHINA EQUITY AC 2 兰毅 1,361,701 B股 3 MERRILL LYNCH FAR EAST LIMITED 611,000 B股 4 姜玉明 511,100 B股 5 沈光海 490,000 B股 6 徐火林 441,600 B股 7 杨钟琅 300,000 B股 8 NAITO SECURITIES CO., LTD. 287,000 B股 9 万国证券公司 215,450 B股 10 吴群娟 205,000 B股 13 第四节 董事、监事、高级管理人员和员工情况 1、基本情况 持股数（股） 姓名 职 务 性别 年龄 任期起止日期 变动原因 年初 年末 倪永刚 董事长 男 56 2003.5-2006.5 6900 7935 资本公积转增 何忠源 副董事长 男 55 2003.5-2006.5 5100 5865 资本公积转增 王立喜 执行董事、总经理 男 44 2003.5-2006.5 3000 3450 资本公积转增 张宗明 执行董事 女 46 2003.5-2006.5 0 575 二级市场买入 费方域 独立董事 男 55 2003.5-2006.5 2600 2990 资本公积转增 刘仁德 独立董事 男 58 2003.5-2006.5 0 0 - 刘向东 独立董事 男 53 2003.5-2006.5 0 0 - 贾春荣 董事 男 55 2003.5-2006.5 0 0 - 陈明其 董事 男 49 2003.5-2006.5 0 1725 二级市场买入 沈逸波 董事 男 38 2003.5-2006.5 0 0 - 范伟民 监事会主席 男 54 2003.5-2006.5 0 0 - 孙 震 监事 男 48 2003.5-2006.5 4600 5290 资本公积转增 诸葛惠玲 监事 女 35 2003.5-2006.5 0 0 - 张恒亮 副总经理、总工程师 男 57 2003.5-2006.5 4600 5290 资本公积转增 蒋金荣 副总经理 男 49 2003.5-2006.5 0 0 - 陈长保 副总经理 男 48 2003.5-2006.5 0 0 - 徐晓晖 财务负责人 女 50 2003.5-2006.5 0 0 - 张一枫 董事会秘书 男 53 2003.5-2006.5 2390 2748 资本公积转增 注：上述人员所持股份均处于锁定状态。 董事、监事在股东单位任职情况 姓名 任职的股东名称 职务 任职期间 范伟民 上海轻工控股（集团）公司 党委、行政办公室主任 1996 年 1 月至今 贾春荣 上海市上投投资管理有限公司 总经理 2003 年 8 月至今 沈逸波 中国长城资产管理公司上海办事处 债权管理部处长 2003 年 1 月至今 陈明其 上海轻工控股（集团）公司 经济运行部副经理 2002 年 11 月至今 2、年度报酬情况 报酬确定依据：目前，公司董事、监事及高级管理人员的工资、福利待遇实 行基薪和加薪结合生产经营量化指标绩效挂钩考核的办法。 报告期内，公司董事、监事和高级管理人员共 18 人，年度报酬总额为 111.28 14 万元，其中年度报酬数额在 5 万元以下为 9 人；5 万元—10 万元区间内为 7 人； 10 万元以上为 2 人。 在公司领取报酬金额最高的前三名董事的报酬总额为 42.88 万元，前三名高 级管理人员的报酬总额为 25.19 万元。 经公司股东大会审议通过，本年度公司支付独立董事年度津贴为每人 4 万元 （含税）；经公司执行董事讨论，同意公司按人均 600 元/月标准乘以任职月份 计算，在年终一次性支付体外董事、监事交通津贴（含税），独立董事除外。 3、报告期内，董事、监事、高级管理人员变动情况 （1）聘任情况 ①报告期内公司进行了董事会、监事会的换届工作。2003 年 5 月 20 日，公 司 2002 年度股东大会选举倪永刚先生、何忠源先生、王立喜先生、张宗明女士、 陈明其先生、贾春荣先生、沈逸波先生为公司第四届董事会董事；选举费方域先 生、刘向东先生、刘仁德先生为公司第四届董事会独立董事；选举范伟民先生、 孙震先生为公司第四届监事会监事；2003 年 3 月，公司召开职工代表大会选举诸 葛惠玲女士为第四届监事会职工监事。 ② 2003 年 5 月 20 日,公司召开第四届董事会第一次会议。选举倪永刚先生 为公司董事长，何忠源先生为公司副董事长；选举倪永刚先生、何忠源先生、王 立喜先生、张宗明女士为公司董事会执行董事；聘任王立喜先生为公司总经理； 经总经理提名，聘任张恒亮先生为公司副总经理兼总工程师；蒋金荣先生、陈长 保先生为公司副总经理；徐晓晖女士为公司财务负责人；聘任张一枫先生为公司 董事会秘书，顾根荣先生为公司董事会证券事务代表。 ③ 2003 年 5 月 20 日,公司召开第四届监事会第一次会议，选举范伟民先生 为公司监事会主席。 （2）离任情况 报告期内，公司董事会、监事会分别进行换届改选。雷杰先生、陈惠民先生 不再担任董事职务；刘俊兰女士不再担任监事职务。 4、公司员工情况 至 2003 年末，公司在册员工总数为 3,271 人，除各种原因离岗外，实际在岗 人数为 1,847 人，其中：生产人员 1,468 名，占 79.48%，工程技术人员 169 名， 占 9.15%，财务人员 56 名，占 3.03%，销售人员 43 名，占 2.33%，行政人员 111 15 名，占 6.01%。有大专学历以上人数为 255 名，具有各类专业技术职称的人数为 432 人。具有博士、硕士学历和高级职称的人数为 20 人，全公司现有退休人员 3,154 人，其退休工资、医疗费用由社会统筹解决。 16 第五节 公司治理结构 1、公司治理情况 公司严格按照《公司法》、《证券法》和中国证监会《上市公司治理准则》 的要求，重视不断完善公司法人治理结构、规范公司运作。 （1）关于股东与股东大会：公司重视股东的利益，特别是中小股东，按其持 有的股份，享有平等的地位，充分行使自己的权力。公司根据股东大会规范意见， 进一步规范股东大会的召集、召开和议事程序。在审议公司融资议案时，实行累 积投票制度。公司关联交易活动遵循商业原则，定价依据充分披露，关联方股东 在表决时放弃表决权，确保股东的合法权益。 （2）关于控股股东与上市公司：报告期内，公司制订了控股股东行为规范， 公司与控股股东在人员、资产、财务、机构和业务方面做到“五分开”，公司董 事会、监事会和内部机构能够独立运作。 （3）关于董事与董事会：公司按照《章程》规定的董事选聘程序选举董事， 董事会具备合理的专业结构，董事能够积极参加业务培训，熟悉有关法律法规， 了解董事的权利、义务和责任，能够以认真负责、勤勉诚信的态度履行职责；按 照上市公司建立独立董事的有关规定，公司董事会成员中配备了三名独立董事； 董事会设立的战略、审计、提名、报酬与考核委员会能按规定开展工作。 （4）关于监事与监事会：公司监事会的人员和结构符合法律、法规要求； 公司监事能够认真履行自己的职责，本着对全体股东负责的态度，对公司财务及 公司董事、经理和其他高级管理人员履行职责的合法合规性进行监督。 （5）关于绩效评估和激励约束机制：公司管理人员全部实行竞聘上岗，高 级管理人员定期向董事会报告工作，向职工代表大会述职并接受评议。董事和高 管人员的绩效评价由公司人事部门组织日常考核与测评，年末由薪酬考核委员会 进行考核评定，并确定其报酬情况。 （6）关于利益相关者：公司能够充分尊重银行及其他债权人、职工、消费 者、供应商、社区等利益相关者的合法权益，充分发挥公司员工参与企业管理的 积极性，重视公司的社会责任，共同推动公司持续、健康、稳定发展。 （7）关于信息披露与透明度：公司指定董事会秘书负责信息披露工作、接 待股东来访和咨询；公司能够按照法律、法规和公司《章程》的规定，真实、准 确、完整、及时地披露有关信息，并确保所有股东有平等的机会获得有关信息。 17 公司能够按照有关规定，及时披露大股东或公司实际控制人的详细资料和股份的 变化情况。 2、独立董事履行职责情况 三位独立董事积极出席董事会，按照有关规定分别从法律和财务的角度对公 司的生产经营、对外投资、董事和高层管理人员工作变动、对外担保等重大事项 三次发表了独立意见，对董事会科学决策起到了积极作用，切实维护了公司及中 小股东的利益。 根据董事会专门委员会实施细则，薪酬与考核委员会召开了一次会议，审议 对公司高层经营管理人员年度考核的方案；战略委员会围绕实施“走出去”战略， 进行国际并购，经常听取项目组成员关于股权收购工作进展情况介绍，并提出有 益的建议；提名委员会根据公司换届改选的计划开展活动，按时向董事会提交了 第四届董事会董事候选人名单；审计委员会对公司的年度审计结果进行分析，对 改善公司的经营提出了有益的建议。 3、与控股股东“五分开”情况 公司与控股股东在业务、人员，资产、财务、机构上分开，公司的人员独立、 财务独立、资产完整、机构独立，具有完整的生产经营能力。 公司拥有独立的生产系统、辅助生产系统和配套设施，拥有独立的采购和销 售系统；公司制定了独立的劳动、人事及工资管理规章和制度，公司的高级管理 人员均在本公司领取报酬，未在控股股东单位担任行政职务；公司资产独立、完 整，拥有独立的土地使用权及知识产权，公司设立了独立的组织机构，不存在与 控股股东合署办公的情况；公司拥有独立的财务管理部，建立了独立的财务核算 体系和财务管理制度，在银行独立开户，独立依法纳税。 4、高级管理人员的考评及激励机制 公司制定了《关于经营者激励目标的考核办法》，公司高级管理人员和分公 司、子公司的高级管理人员收入有基薪和加薪两部分组成，前者为高级管理人员 在经营活动中无重大失误前提下的固定收入，后者根据风险承包目标考核，根据 经营业绩确定。 公司对高管人员的绩效评价由公司人事部门进行日常考核和测评，年末由薪 酬委员会综合评定，并确定报酬情况。 5、因资产并购导致公司财务报告长期股权投资（合并数）中出现持有本公 18 司法人股情况，目前因法人股过户尚未开始办理，故暂未解决。 19 第六节 股东大会情况简介 报告期内公司共召开了一次年度股东大会和一次临时股东大会。 1、2002 年度股东大会情况 2003 年 4 月 19 日公司在《上海证券报》和香港《商报》上公告了召开 2002 年度股东大会的通知。公布了会议召开时间、地点、会议议程等事项。 2002 年度股东大会于 2003 年 5 月 20 日在上海影城召开，出席会议的股东及 委托代理人有 108 名，代表股份 131,309,913 股，占公司股份总数的 52.0109%， 其中 B 股股东及委托代理人 14 名，代表股份数 803,050 股。 经大会审议，表决通过了以下决议：《董事会工作报告》、《监事会工作报 告》、《财务工作报告》、《2002 年度利润分配预案》、《2002 年度资本公积 金转增股本的预案》、《支付会计师事务所 2002 年度审计报酬的议案》、《关 于董事会、监事会换届改选议案》、《关于授权公司董事长和总经理行使有关权 限的议案》、《关于公司控股股东行为规范的议案》。有关本次股东大会的决议 公告刊登于 2003 年 5 月 22 日的《上海证券报》及香港《商报》上。 2、2003 年第一次临时股东大会情况 2003 年 11 月 29 日公司在《上海证券报》和香港《商报》上公告了召开 2003 年第一次临时股东大会的通知。公布了会议召开时间、地点、会议议程等事项。 公司 2003 年第一次临时股东大会于 2003 年 12 月 30 日在上海影城召开，出 席会议的股东及委托代理人有 86 名，代表股份 199,985,272 股，占公司股份总数 的 51.2340%，其中 B 股股东及委托代理人 16 名，代表股份数 51,935,463 股。 经大会审议，表决通过了以下决议：《关于公司章程修正案》、《关于公司 调整 2003 年度境外审计机构的议案》、《关于与华源集团续订互保协议、与华 源发展签订扩大互保额度的议案》、《关于转让唐山路地块的议案》、《关于购 买部分缝制加工设备的议案》。有关本次股东大会的决议公告刊登于 2004 年 1 月 2 日的《上海证券报》及香港《商报》上。 3、选举、更换公司董事、监事情况 （1）报告期内公司进行了董事会、监事会的换届工作。2003 年 5 月 20 日， 公司 2002 年度股东大会选举倪永刚先生、何忠源先生、王立喜先生、张宗明女 士、陈明其先生、贾春荣先生、沈逸波先生为公司第四届董事会董事；选举费方 20 域先生、刘向东先生、刘仁德先生为公司第四届董事会独立董事；选举范伟民先 生、孙震先生为公司第四届监事会监事；2003 年 3 月，公司召开职工代表大会选 举诸葛惠玲女士为第四届监事会职工监事。 （2）2003 年 5 月 20 日，公司董事会、监事会分别进行换届改选，雷杰先生、 陈惠民先生不再担任董事职务；刘俊兰女士不再担任监事职务。 21 第七节 董事会报告 1、公司报告期内经营情况讨论与分析 2003 年，公司的生产经营遭遇非典疫情、高温缺电、原材料提价等多重困难， 国内同行业竞争又十分激烈，对此公司采取了一系列措施。一是加快产品结构调 整，对缝制设备常规产品的产量主动作了调整，减少库存，使产销结合率接近 100%；二是加强质量管理体系建设，按用户要求对主导产品新一代高平系列机种 不断进行质量攻关和工艺改进，使产品品质和档次明显提高；三是加大新品研发 力度，完成了高速无油润滑自动平缝机等五个机种的开发，对这些机种的创新点 申报了专利，并积极创造条件，尽快使这些新品成为经济增长点；四是加快做好 国际并购准备工作，公司积极争取各方面的支持，完成了向境外机构投资者募集 资金的工作，同时认真制订和不断完善国际并购业务整合计划，从研发、生产、 销售和零件配套等资源配置和潜能发挥作了详尽的安排。 报告期内，公司实现主营业务收入 86,680 万元，同比下降 0.97 %；实现主营 业务利润 10,901 万元，同比下降 29.31 %；实现净利润 1,459.6 万元，同比增长 10.9%。 （1）公司主营业务范围及其经营状况 公司属缝纫设备机械制造行业，主营生产销售缝制设备及零部件、缝纫机专 用设备、技术开发与咨询。 ① 报告期内公司生产和销售各类工业缝纫机分别为 91,182 台和 92,414 台， 其中新产品产量占工业机总产量的 59.7%，生产和销售各类家用缝纫机分别为 450,207 台和 451,039 台。公司产品出口占销售收入 40.61%，全年出口创汇 4,256.18 万美元，接近于去年同期水平。 ② 报告期内主营业务收入，主营业务利润的构成情况： a、报告期内，公司主营业务收入为 86,680 万元，构成情况如下： 单位：万元 分行业或 主营业务 主营业务 毛利率 主营业务收入比 主营业务成本 毛利率比 分产品 收入 成本 （%） 上年增减 比上年增减 上年增减 （%） （%） （%） 缝制设备 64,168 56,693 11.65 -2.12 5.52 -35.46 办公用品 18,703 16,073 14.06 9.04 7.44 10.02 生化产品 2,118 2,062 2.64 -12.80 -1.10 -81.36 房地产 1,094 447 59.14 -38.44 -35.78 -2.78 22 其他 597 324 45.73 -2.45 -16.92 26.08 其中：关联交易 关联交易的定价 原则 关联交易必要 性、持续性的说 明 占主营业务收入 10%以上的主要产品系缝制设备、办公用品，占主营业务利 润 10%以上的主要产品系缝制设备、办公用品。 b、报告期内，公司主营业务利润为 10,901 万元，构成情况如下： 分行业或分产品 主营业务利润构成比例% 缝制设备 68.21 办公用品 23.47 房地产 5.56 合 计 97.24 C、主营业务分地区情况 单位:万元 地 区 主营业务收入 主营业务收入比上年增减（%） 境 内 48,052 -10.90 境 外 38,628 14.97 （2）主要控股公司及参股公司的经营情况及业绩 单位：万元 公司名称 业务性质 净资产 总资产 注册资本 股权 净利润 上海宝灵工程设备成套有限公司 贸易 59.2 220.6 55 90% 3.0 上海永德经济发展有限公司 贸易 140.3 581.2 200 80% 0.8 上海富华轻机有限公司 贸易 688.6 966.6 576 55% 4.0 上海工业缝纫机物产总公司 贸易 459.5 466.9 465 100% 0.3 南通上工缝纫机有限公司 贸易 84.4 488.0 80 65% 1.0 无锡上工缝纫机有限公司 贸易 36.7 65.5 50 80% -4.4 达到本公司净利润 10%的参股公司有 0 家。 （3）主要供应商、客户情况 本公司主营业务为缝制设备制造和销售。供应商主要为缝制设备零部件供应 商，前五名供应商合计的采购金额为 1,633.2 万元，占年度采购总额的比例为 28.81%。 本报告期内，公司前五名销售客户销售金额合计为 6,518.78 万元，占缝制设 备产品销售收入的 10.16%。 （4）在经营中出现的问题与困难及解决方案 我国加入 WTO 后，关税逐步降低，2003 年原材料生铁、钢材价格有所上涨， 国内同行业的竞争更趋激烈，同时，公司自身新业务开拓能力和新技术开发能力 与国际同行业相比，又存在较大差距，对此，公司积极贯彻实施“走出去”战略， 23 以金融创新为手段，将资本运作与产业升级相结合，借助国际合作外力，通过移 植、对接、引智和合作等多种形式，全面提升公司主业竞争力，摆脱国内同行业 低层次竞争的困扰。 2、公司报告期内投资情况 （1）募集资金使用情况 本公司于 2003 年 11 月 7 日至 11 月 11 日向已选定的境外机构投资者发行境 内 上 市 外 资 股 （ B 股 ） 10,000 万 股 ， 扣 除 发 行 费 用 后 ， 募 集 资 金 人 民 币 322,639,964.52 元.。本次募集资金投资项目的情况如下： 序号 承诺投资项目 实际投资项目 计划投资金额（万元） 实际投资金额 小计 2003 年 2004 年 （万元） 1 收购 DA 公司项目 同左 20,096 14,679 5,417 --- 2 利用德国 DA 公司技 同左 19,500 12,000 7,500 --- 术建设电脑特种工 业缝纫机项目 合计 39,596 26,679 12,917 --- 公司本次发行 B 股募集资金的时间为 2003 年 11 月 7 日至 11 月 11 日，自发 行结果公告日起，公司就与德国 DA 公司控股股东就股权转让进行正式谈判，计 划于 2004 年一季度确定收购框架，上半年正式签订股权收购协议。 （2）报告期内，公司非募集资金投资项目情况 经公司三届二十五次董事会议审议通过，公司出资 2,700 万元，组建上海上 工资产经营管理有限公司，本公司拥有 90%股权，该公司注册资本为人民币 3,000 万元，经营范围：实业投资、资产经营、投资管理、企业收购、兼并、管理、咨 询服务、商务信息咨询；销售机电设备、缝制设备及配件、金属材料等。 3、公司财务状况分析 2003 年末总资产为 1,735,205,977.66 元，较年初增加 380,750,261.32 元， 增长 28.11%，主要原因系增发 B 股增加了货币资金；长期负债为 11,045,479.67 元，较年初减少 7,518,575.24 元，下降 40.5%，主要原因系一年内长期借款 740 万元转入流动负债；股东权益为 859,868,516.39 元，较年初增加 344,876,768.03 元，增长 66.97 %，主要原因系（1）增发 B 股增加 3.22 亿元（2）当年盈利；年 末公司应收帐款余额为 336,866,126.18 元，较年初增长 7.78%，主要原因是（1） 原应收帐款保理贷款转入（2）年末产品出口增加；年末公司其他应收款余额为 24 78,660,076.20 元，较年初下降 10.58%，主要原因是公司注重其他往来的清理工 作，减少不合理的资金占用所致；主营业务利润为 109,010,168.83 元，较上年 度减少 29.31%，净利润为 14,595,602.55 元，较上年度增加 10.9%，主要增减利 因素是： （1）为适应市场竞争，实现有效销售，对不同批量销售采取折让方式，压 缩了库存产品，同时使部分老产品年平均售价有所下降，影响利润 1,501 万元； （2）原材料价格上涨等因素影响产品成本，减少利润 1,525 万元； （3）房地产收入同比减少，影响利润 647 万元； （4）生化产品及其他非缝制设备销售减少，减利 273 万元； （5）同比增加投资收益，增利 1,302 万元； （6）土地补偿净收入 3,915 万元。 现 金 及 现 金 等 价 物 净 增 加 额 为 390,777,963.81 元 ， 较 上 年 同 期 增 加 313,904,376.51 元，主要原因系增发 B 股增加现金流入。其中：经营活动产生的 现金流量净额较上年减少 70,251,887.79 元，原因是（1）由于产品降价，成本 上升，减少现金净流入量，（2）应收款的增加，减少现金流入；投资活动产生 的现金流量净额较上年增加 50,327,789.99 元，主要是土地补偿收入及股权转让 收入；筹资活动产生的现金流量净额较上年增加 333,730,012.44 元，主要是增 发 B 股，增加资本收入。 4、生产经营环境、宏观政策、法规的变化对公司产生的影响。 自 2004 年 1 月起，缝纫机及零件的出口退税率由原先的 17%调整为 13%， 另外，公司产品出口占销售收入的比重较高，人民币汇率的变化，都会对公司产 品出口带来一定影响。 公司主要产品缝纫机及零件属料重工轻，主要原材料生铁、钢材、木材的价 格上涨，也是影响公司效益的重要因素。 2003 年 5 月 14 日，经上海市高新技术企业（产品）认定办公室复审通过， 本公司为 2003 年度第一批复审合格的“上海市高新技术企业”。 另外，公司注 册地为上海浦东新区，根据浦东开发区的税收政策，公司 2004 年度实际所得税 税率仍为 15%。 公司收购德国 FAG 公司控股子公司股权的计划，如能顺利实施，将对公司 的生产经营产生重大影响。 25 5、新年度的经营计划 （1） 利用我国加入 WTO 和国际缝制设备制造业调整的机会，扩大国际合 作，通过“引进来”和“走出去”有机结合，实现双向良性互动，在国际合作的 深度和广度上达到质的飞跃。 （2） 建设和扩大国内外销售网络体系，培育优秀的代理商，设立海外经营 机构，推进与跨国公司的合作（包括 OEM 和产品的合作开发），充分利用国际 销售网络优势，提高产品市场占有率。 （3） 通过技术改造，充分利用现有技术和设备存量资源，降低各项费用， 提高投入产出比例，提高主导产品的价格性能比。 （4） 完善人才竞争机制和激励机制，提高全体员工素质，采用多种形式吸 引国际人才。加强公司的开发、营销和管理工作，使公司在营销、技术和管理理 念上与世界先进水平保持同步。 （5）不断改进现有产品的质量和功能，开发派生机种，拓展品种，以高新 技术提升产品技术含量，使传统产品向机电一体化产品转移。 6、董事会日常工作情况： (1) 报告期内董事会的会议情况及决议内容 2003 年度，公司董事会共召开了七次董事会会议。 ①三届二十五次董事会议于 2003 年 4 月 17 日召开，审议通过了公司 2002 年度《董事会工作报告》、《财务工作报告》、《2002 年度利润分配预案及资本 公积金转增股本的预案》、《支付会计师事务所 2002 年度审计报酬的议案》、 《2002 年度报告和年报摘要》、《关于公司第四届董事会董事候选人提名的议 案》、《授权公司董事长和总经理行使有关权限的议案》、《关于公司控股股东 行为规范的议案》、《公司内部管理制度的议案》、《公司与上海提兰桥投资管 理有限公司共同出资组建上海上工资产经营管理有限公司的议案》。决定于 2003 年 5 月 20 日召开 2002 年度股东大会。决议公告于 2003 年 4 月 19 日的《上海证 券报》和香港《商报》。 ②三届二十六次董事会议于 2003 年 4 月 25 日召开，审议通过了公司《2003 年第一季度报告》、《关于将控股子公司上海飞人进出口有限公司、上海蝴蝶进 出口有限公司各 10%股权转让给该企业经营者群体的议案》。 ③四届一次董事会议于 2003 年 5 月 20 日召开,审议通过了如下决议： 26 选举倪永刚先生为公司董事长，何忠源先生为公司副董事长；选举倪永刚先 生、何忠源先生、王立喜先生、张宗明女士为公司董事会执行董事；聘任王立喜 先生为公司总经理；经总经理提名，聘任张恒亮先生为公司副总经理兼总工程师， 蒋金荣先生、陈长保先生为公司副总经理，徐晓晖女士为公司财务负责人；聘任 张一枫先生为公司董事会秘书，顾根荣先生为公司董事会证券事务代表。决议公 告于 2003 年 5 月 22 日的《上海证券报》和香港《商报》。 ④四届二次董事会议于 2003 年 7 月 21 日召开，审议通过了《2003 年半年度 报告和摘要》、《关于调整董事会专业委员会成员》。决议公告于 2003 年 7 月 23 日的《上海证券报》和香港《商报》。 ⑤ 四届三次董事会议于 2003 年 10 月 30 日以通讯方式举行，审议通过了公 司《2003 年第三季度报告》、《关于公司开展投资者关系管理工作的自查报告》、 《投资者关系管理制度》。决议公告于 2003 年 10 月 31 日的《上海证券报》和香 港《商报》。 ⑥ 四届四次董事会议于 2003 年 11 月 28 日召开，审议通过了《关于公司“章 程”修正案》、《关于公司调整 2003 年度境外审计机构的议案》、《关于与华 源集团续订互保协议、与华源发展签订扩大互保额度的议案》、《关于转让唐山 路地块的议案》、《关于购买部分缝制加工设备的议案》，决定于 2003 年 12 月 30 日召开公司 2003 年第一次临时股东大会。 决议公告于 2003 年 11 月 29 日的 《上 海证券报》和香港《商报》。 ⑦ 四届五次董事会议于 2003 年 12 月 30 日召开，审议通过了《关于将公司 所持上海上工针业有限公司 94.29%股权有偿转让给上海日用五金公司的议案》。 决议公告于 2004 年 1 月 2 日的《上海证券报》和香港《商报》。 （2）董事会对股东大会决议的执行情况 本报告期内，公司董事会认真执行了股东大会的各项决议，及时地完成了股 东大会交办的各项工作。 ① 根据公司 2002 年度股东大会决议，“以 2002 年末股本总额 252,466,370 股为基数，向全体股东每 10 股资本公积金转增 1.5 股”，2003 年 5 月 28 日公司 于《上海证券报》和香港《商报》刊登转增股本实施公告，以 6 月 2 日为 A 股股 权登记日，（B 股股权登记日为 6 月 5 日，B 股最后交易日为 6 月 2 日）6 月 3 日 为除权日，实施了以上方案。 27 ②根据公司 2002 年第一次临时股东大会的决议和授权，公司董事会积极着 手申请定向增发 B 股的各项准备工作。报告期内，公司向选定的境外机构投资者 发行境内上市外资股（B 股）的申请，获得中国证监会证监发行字（2003）133 号文核准实施。本次发行最终确定的价格为 0.428 美元/股，发行数量为 10000 万股，募集资金总额为 4280 万美元，扣除发行费用，实收增发新股资金净额为 322,639,964.52 元。募集资金已经于 2003 年 11 月 26 日到位，上海众华沪银会 计师事务所有限公司对上述资金进行了验证，并出具了（2003）第 1334 号验资 报告。 7、本次利润分配预案 （1）二○○三年度利润分配预案 经上海众华沪银会计师事务所有限公司按中国会计制度审计，二 00 三年度 公司实现合并净利润为 14,595,602.55 元，（德豪国际会计师事务所按国际会计制 度审计为 1,398.8 万元），母公司净利润为 13,650,851.93 元。 根据《公司法》和本公司及各控股子公司章程的规定，提取法定盈余公积金 5,784,747.36 元，提取法定公益金 5,784,747.36 元,二 00 三年度不计提任意公积金， 当年可供股东分配的利润为 3,026,107.83 元，加上 2003 年初未分配利润余额 991,046.43 元和其他转入数 1,130,448.75 元， 累计可供股东分配利润为 5,147,603.01 元。 由于目前本公司正处于收购兼并及技术改造的重要时期，资金需求量较大， 为加快公司的发展，谋求股东的长远利益，董事会决定 2003 年度不进行派发现 金股利和送红股。 （2）二○○三年度资本公积金转增股本预案 公司年末资本公积金余额为 441,976,114.68 元，拟以 2003 年末股本总额 390,336,328 股为基数向全体股东每 10 股资本公积金转增 1.5 股，共转增 58,550,449 股，本次转增后资本公积金尚余 383,425,665.68 元。 因资本公积金转增引致公司股本变化，由公司董事会负责办理相关事宜。 上述预案需提交公司 2003 年度股东大会审议并通过。 8、其他报告事项 （1） 报告期内，公司选定的信息披露报纸无变更，仍为《上海证券报》和 香港《商报》。 28 （2） 注册会计师对公司的控股股东及其他关联方占用资金情况的专项审 计意见[沪众会字（2004）第 1371 号]。 我们接受委托，依据《中国注册会计师独立审计准则》审计了上工股份有限 公司（以下简称“上工股份”）2003 年度的会计报表，并于 2004 年 4 月 15 日出 具了沪众会字(2004)第 0037 号《审计报告》。 根据中国证券监督管理委员会及国务院国有资产监督管理委员会《关于规范 上市公司与关联方资金往来及上市公司对外担保若干问题的通知(证监发 [2003]56 号文)》和中国证监会上海证券监督办公室《关于对上市公司与关联方 资金往来及对外担保情况出具专项审计意见的通知（沪证司[2004]11 号）》的要 求，上工股份编制了后附的截至 2003 年 12 月 31 日止年度上工股份控股股东及其 他关联方《占用资金情况表》和《特殊担保情况表》（以下简称“情况表”）。 如实编制和对外披露情况表并确保其真实、合法及完整是贵公司管理当局的 责任，我们对情况表所载资料与上工股份 2003 年度已审的会计报表及相关资料 的内容进行了复核，在所有重大方面未发现不一致之处。 本专项审计说明仅作为上工股份披露控股东及其他关联方占用资金情况之 用，不用作任何其他目的。 特殊担保情况表 金额单位：万元 担保人(上 被担保对象名称 被担保对象与 担保 担保开始日 目前是否仍 担保方式 市公司/ 上市公司的关系 金额 存在担保责 上市公司子 任 公司) 上市公司 上海上工针业有限公司 控股股东的子公司 140 2003-09-28 否 连带责任保证担保 上市公司 上海上工针业有限公司 控股股东的子公司 126 2003-10-09 否 连带责任保证担保 上市公司 上海上工针业有限公司 控股股东的子公司 38 2003-10-16 否 连带责任保证担保 上市公司 上海上工针业有限公司 控股股东的子公司 428 2003-11-27 否 连带责任保证担保 上市公司 上海上工针业有限公司 控股股东的子公司 658 2003-12-12 否 连带责任保证担保 上市公司 上海上工针业有限公司 控股股东的子公司 176 2003-12-19 是 连带责任保证担保 上市公司 上海上工针业有限公司 控股股东的子公司 1500 2003-12-30 是 连带责任保证担保 上市公司 上海工业缝纫机销售总公司 附属企业 1500 2003-01-23 否 连带责任保证担保 上市公司 上海缝建房地产公司 控股股东的子公司 500 2003-05-29 否 连带责任保证担保 上市公司 上海蝴蝶进出口有限公司 附属企业 600 2003-03-11 否 连带责任保证担保 29 上市公司 上海上工进出口有限公司 附属企业 1000 2003-06-17 是 连带责任保证担保 上市公司 上海上工进出口有限公司 附属企业 300 2003-09-18 是 连带责任保证担保 上市公司 上海上工进出口有限公司 附属企业 800 2003-02-21 否 连带责任保证担保 上市公司 上海上工进出口有限公司 附属企业 2000 2003-04-07 否 连带责任保证担保 上市公司 上海上工进出口有限公司 附属企业 2000 2003-04-10 否 连带责任保证担保 上市公司 上海上工进出口有限公司 附属企业 700 2003-11-10 是 连带责任保证担保 上市公司 上海上工方天机械有限公司 附属企业 1500 2003-01-20 否 连带责任保证担保 上市公司 上海上工企业管理有限公司 附属企业 200 2003-01-21 否 连带责任保证担保 上市公司 上海双重包缝机有限公司 附属企业 500 2003-06-30 否 连带责任保证担保 上市公司 上海双重包缝机有限公司 附属企业 700 2002-12-25 是 连带责任保证担保 上市公司 上海上工兴达衣车机械有限 附属企业 800 2003-08-22 是 连带责任保证担保 公司 上市公司 上海上工兴达衣车机械有限 附属企业 190 2003-11-12 是 连带责任保证担保 公司 上市公司 上海飞人进出口有限公司 附属企业 300 2003-08-22 是 连带责任保证担保 上市公司 上海华源企业发展股份有限 其他企业 1000 2003-08-19 是 连带责任保证担保 公司 上市公司 上海华源企业发展股份有限 其他企业 3000 2003-09-12 是 连带责任保证担保 公司 上市公司 上海华源企业发展股份有限 其他企业 3000 2003-06-27 是 连带责任保证担保 公司 上市公司 上海华源企业发展股份有限 其他企业 3000 2003-09-18 是 连带责任保证担保 公司 上市公司 中国华源集团有限公司 其他企业 3000 2003-08-08 是 连带责任保证担保 上市公司 中国华源集团有限公司 其他企业 5000 2003-12-16 是 连带责任保证担保 上市公司 中国华源集团有限公司 其他企业 2000 2003-12-16 是 连带责任保证担保 上市公司 上海建筑材料(集团)总公司 其他企业 3000 2003-03-14 是 连带责任保证担保 资金占用情况表 金额单位：万元 资金占用方 与资金占 对应的会计 年末占 年初占 累计发生金额 占用方式及 备注 用方关系 报表科目 用 用 资金占用 资金占用 原因 借方 贷方 上海轻工控股（集团）控股股东 其他应收款 - 58 17,120 17,178 拆借，资金 见附件 公司 周转困难 上海缝纫机螺丝厂 控 股 股 东 其他应收款 - 3 241 244 拆借，资金周 的子公司 转困难 30 上海工缝电器有限公 控 股 股 东 其他应收款 - 522 109 631 拆借，资金周 司 的子公司 转困难 上海华强缝制设备厂 控 股 股 东 其他应收款 154 581 9,634 10,061 拆借，资金周 的子公司 转困难 上海金鹰缝纫机零件 控 股 股 东 其他应收款 4 4 - - 拆借，资金周 厂 的子公司 转困难 上海浦江金属品厂 控 股 股 东 其他应收款 - 116 34 150 拆借，资金周 的子公司 转困难 上海上工华莘精密机 控 股 股 东 其他应收款 - 461 234 695 拆借，资金周 械有限公司 的子公司 转困难 上海上工针业有限公 控 股 股 东 其他应收款 656 - 2,224 1,568 拆借，资金周 司 的子公司 转困难 上海永德经济发展有 控 股 子 公 其他应收款 1，063 - 1,614 551 拆借，资金周 限公司 司 转困难 上海工业缝纫机物产 控 股 子 公 其他应付款197 总公司 司 万元 附件： 关于上工股份有限公司控股股东占用资金情况的说明 本年度内持有上工股份 29.78%股权之第一大股东上海轻工控股（集团）公司占用上工股 份资金期初余额 58 万元（已经于 2003 年 8 月 21 日归还），本期借方累计发生额 17,120 万 元，贷方累计发生额 17,178 万元，期末余额为零。具体的占用资金、占用时间及期限如下： 金额单 位：万元 占用金额 占用时间 天数 4,280 2003.01.02-2003.03.31 89 4,280 2003.04.01-2003.06.30 90 4,280 2003.07.01-2003.09.30 91 4,280 2003.10.08-2003.12.31 84 合 计 354 （3）公司独立董事关于对外担保的专项说明及独立意见 我们作为公司独立董事，本着对公司全体股东特别是广大中小股东负责的态 度，根据中国证监发（2003）56 号《关于规范上市公司与关联方资金往来及上市 31 公司对外担保若干问题的通知》，审查了公司 2003 年度对外担保情况。 经查验，公司按照《公司章程》的要求，制订了《关于对外提供担保的有关 规定》，并能较好执行。 截止报告期末，公司对外担保总额为 39656 万元，未超过公司 2003 年末合 并报表净资产额 50%，且各被担保单位履行协议情况良好，未出现逾期情形。因 此，公司总体对外担保情况尚处于可控制状态，不会对公司未来经营带来风险。 在上述担保总额中，对控股股东下属两家子公司担保额为 3566 万元，该两 家公司原为本公司子公司，后转让给控股股东关联方，属历史遗留问题，尽管在 总担保额中所占的比例偏低，但公司管理层应高度重视，以积极稳妥的方式尽快 予以解决。除此之外，公司没有为控股股东及公司持股 50%以下的其他关联方、 任何非法人单位或个人提供担保。 32 第八节 监事会报告 1、报告期内监事会工作情况 本报告期内监事会共召开了七次会议： （1）三届十四次监事会议于 2003 年 4 月 17 日召开，审议通过了《公司 2002 年年度监事会工作报告》、《2002 年年度报告和摘要》、《关于公司第四届监事 会监事候选人的议案》。决议公告于 2003 年 4 月 19 日《上海证券报》和香港《商 报》。 （2）三届十五次监事会议于 2003 年 4 月 25 日召开，审议通过了《公司 2003 年第一季度报告》。 （3）四届一次监事会议于 2003 年 5 月 20 日召开，会议通过决议，选举范伟 民先生为公司监事会主席。决议公告于 2003 年 5 月 22 日《上海证券报》和香港 《商报》。 （4）四届二次监事会议于 2003 年 7 月 21 日召开，审议通过了《公司 2003 年半年度报告及摘要》。 （5）四届三次监事会议于 2003 年 10 月 30 日召开，审议通过了《公司 2003 年第三季度报告》。 （6）四届四次监事会议于 2003 年 11 月 28 日召开，审议通过了《关于公司“章 程”修正案》、《关于公司调整 2003 年度境外审计机构的议案》、《关于与华 源集团续订互保协议、与华源发展签订扩大互保额度的议案》、《关于转让唐山 路地块的议案》、《关于购买部分缝制加工设备的议案》。决议公告于 2003 年 11 月 29 日《上海证券报》和香港《商报》。 （7）四届五次监事会议于 2003 年 12 月 30 日召开，审议通过了《关于将公司 所持上海上工针业有限公司 94.29%股权有偿转让给上海日用五金公司的议案》。 决议公告于 2004 年 1 月 2 日的《上海证券报》和香港《商报》。 2、监事会对公司 2003 年度有关事项的独立意见 （1）公司依法运作情况 公司依法召开股东大会、董事会议和监事会议，公司决策程序按照《章程》 33 规定的程序进行，保证了公司依法运作。公司建立了比较完善的内部控制制度， 并有效执行，防止了经营管理风险；公司董事、总经理在执行公司职务时，未发 现有违反法律、法规、公司章程及损害公司利益和侵犯股东权益的行为。 （2）检查公司财务的情况 上海众华沪银会计师事务所有限公司对公司 2003 年度财务报告出具了标准 无保留意见的审计报告。监事会认为该审计报告真实地反映了公司的财务状况和 经营成果。 （3）公司募集资金使用情况 公司募集资金使用情况详见本报告第七节相关内容，监事会检查认为募集资 金计划用途与实际投资使用情况一致。 （4）收购出售资产情况 公司收购出售资产交易时，价格合理，是在公平、互利的基础上进行的，没 有发现内幕交易和损害公司及股东的权益。 （5）关联交易情况 公司关联交易均按市场公平交易的原则进行，没有发现损害公司和股东利益 的行为。 34 第九节 重要事项 1、重大诉讼、仲裁事项 本年度公司无重大诉讼、仲裁事项 2、报告期收购或出售资产情况 （1）经公司三届二十六次董事会议审议，公司以 2002 年 12 月 31 日为评估 基准日，以经评估后的价值为依据，将所持股权各为 90%的上海飞人进出口有限 公司、上海蝴蝶进出口有限公司中的 10%股份分别以 118 万元和 156 万元的价格 转让给以许雪芳为代表的上海飞人进出口有限公司和以于丽丽为代表的上海蝴 蝶进出口有限公司的企业经营者群体。股权转让于 2003 年 4 月完成，本公司持有 上述子公司的股权分别降为 80%。 （2）经公司 2003 年第一次临时股东大会审议通过，为配合市政建设，公司 将唐山路 902 号地块（约 8,506 ㎡）整体有偿转让给上海市虹口区土地发展中心， 公司取得补偿费为 4,720.38 万元。 3、报告期内发生的重大关联交易事项 （1） 经公司 2003 年第一次临时股东大会审议通过，2003 年 11 月 28 日公 司与上海飞人协昌缝制机械有限公司签订设备转让协议，本次交易的设备为 19 台（套）工业缝纫机零部件加工设备，交易价格为 1,916 万元，全部款项已在 2003 年 12 月 8 日付清。 （2） 经公司四届五次董事会议审议通过，公司将所持上海上工针业有限公 司 94.29%股权以经评估后的价值为定价依据，以 1,369.97 万元的价格转让给上海 日用五金公司，本公司已于 2003 年 12 月 31 日收到全部转让款项。 4、报告期内与关联方债权债务事项 单位：万元 关联方 向关联方提供资金 关联方向上市公司提供资金 发生额 余额 发生额 余额 上海轻工控股（集团）公司 -57.71 0 -170.67 0 上海金鹰缝纫机零件厂 4 上海华强缝制设备厂 -427.25 153.82 上海缝纫机螺丝厂 -3.04 0 上海工缝电器有限公司 -521.63 0 上海浦江金属品厂 -116.56 0 35 上海上工华莘精密机械有限公司 -460.72 0 上海上工针业有限公司 656 656 合计 813．82 0 5、报告期内，公司重大合同及其履行情况 （1） 公司无托管、承包、租赁其他公司资产及其他公司托管、承包、租赁 上市公司资产的事项。 （2） 根据公司规定，经董事会和股东大会审议通过，公司与下列单位建立 了担保关系，至报告期末公司为下列单位提供担保情况如下： 单位：万元 担保对象名称 发生日期（协 担保金额 担保类型 担保期 是否履行 是否为关 议签署日） 完毕 联方担保 上海建筑材料（集 2002-09-28 3,000 连带责任担保 二年 否 否 团）总公司 上海华源企业发 2002-09-11 10,000 连带责任担保 二年 否 否 展有限公司 中国华源集团有 2003-11-29 10,000 连带责任担保 一年 否 否 限公司 上海上工针业有 2003-09-28 3,066 连带责任担保 一年 否 是 限公司 上海缝建房地产 2003-05-29 500 连带责任担保 九个月 否 是 有限公司 上海工业缝纫机 2003-01-23 1,500 连带责任担保 一年 否 否 销售公司 上海上工进出口 2003-06-17 6,800 连带责任担保 一年 否 否 有限公司 上海飞人进出口 2003-08-22 300 连带责任担保 一年 否 否 有限公司 上海蝴蝶进出口 2003-03-11 600 连带责任担保 一年 否 否 有限公司 上海上工方天机 2003-01-20 1,500 连带责任担保 一年 否 否 械有限公司 上海上工企业管 2003-01-21 200 连带责任担保 一年 否 否 理有限公司 上海上工兴达衣 2003-08-22 990 连带责任担保 一年 否 否 车机械有限公司 上海双重包缝机 2002-12-25 1,200 连带责任担保 二年 否 否 有限公司 担保发生额合计 47,656 担保余额合计 39,656 其中：关联担保余额合计 3,566 36 上市公司对控股子公司担保发生额合计 13,090 违规担保总额 0 担保总额占公司净资产的比例 46.12 （3） 报告期内，公司未发生或以前期间发生但延续到报告期的重大委托他 人进行现金资产管理的事项。 6、承诺事项 报告期内，公司及持股 5%以上股东没有在指定报纸和网站上披露承诺事项。 7、报告期内聘任会计师事务所情况 报告期内，公司续聘上海众华沪银会计师事务所有限公司担任公司的年报审 计工作，目前该审计机构已为本公司提供审计服务的年限为 10 年。 本年度支付给上海众华沪银会计师事务所有限公司的财务审计费用为 46 万 元（上年度审计费用为 30 万元），承担审计期间差旅费 1.14 万元（上年度为 0.95 万元）。 经公司 2003 年第一次临时股东大会审议通过，公司不再聘请香港罗兵咸永 道会计师事务所为公司的境外审计机构，2003 年度聘请德豪国际会计师事务所 （BDOInternational）为公司的境外审计机构。 公司支付德豪国际会计师事务所 2003 年度财务审计费用为 50 万元（上年度 支付境外审计机构的费用为 62 万元），承担审计期间差旅费 0 万元（上年度为 11.76 万元）。 8、本报告期内，公司、公司董事会及董事未有受中国证监会稽查、中国证 监会行政处罚、通报批评、上海证券交易所公开谴责的情况。 9、其他重大事件 经财政部财企[2003]68 号文批准，上海轻工控股（集团）公司将其持有本公 司国家股中的 15,934,978 股，以每股 4.46 元价格分别转让给中国长城资产管理公 司（7,399,104 股）及上海国际信托投资有限公司（8,535,874 股），公告刊登于 2003 年 3 月 11 日《上海证券报》和香港《商报》。 37 第十节 财务报告 境内会计师报告 （一）审计报告 沪众会字(2004)第 0037 号 上工股份有限公司全体股东： 我们审计了后附的上工股份有限公司(以下简称“上工股份”)2003 年 12 月 31 日的资产负债表和合并资产负债表、2003 年度的利润及利润分配表和合并利润及 利润分配表，以及现金流量表和合并现金流量表。这些会计报表的编制是 上工 股份管理当局的责任，我们的责任是在实施审计工作的基础上对这些会计报表发 表意见。 我们按照中国注册会计师独立审计准则计划和实施审计工作，以合理确信会 计报表是否不存在重大错报。审计工作包括在抽查的基础上检查支持会计报表金 额和披露的证据，评价管理当局在编制会计报表时采用的会计政策和作出的重大 会计估计，以及评价会计报表的整体反映。我们相信，我们的审计工作为发表意 见提供了合理的基础。 我们认为，上述会计报表符合国家颁布的企业会计准则和《企业会计制度》 的规定，在所有重大方面公允反映了 上工股份 2003 年 12 月 31 日的财务状况以 及 2003 年度的经营成果和现金流量。 上海众华沪银会计师事务所有限公司 中国注册会计师 林东模 中国注册会计师 李文祥 中国，上海 二〇〇四年四月十五日 38 上工股份有限公司 2003 年度会计报表附注 1. 公司基本情况 上工股份有限公司（以下简称“本公司”）是中国缝制设备行业第一家上市公司， 本公司原名上海工业缝纫机股份有限公司，1997 年 5 月 29 日经 1996 年度股东大会 决议，更名为“上工股份有限公司”。本公司以生产、销售工业用缝制设备为主， 主要产品有平缝、包缝、套结、钉扣、锁眼、双针、多针、链缝、绷缝及其他特种 工业缝纫机共 10 个大类，21 个系列，100 多个品种。主要产品以“上工牌”、“双 工牌”、“蝴蝶牌”、“蜜蜂牌”、“飞人牌”为注册商标。本公司近年来积极进 行新型缝纫设备的开发、研制。 本公司注册地址为中国上海市罗山路 1201 号，法定代表人倪永刚。 2. 主要会计政策和会计估计 2.1 会计制度 本公司执行企业会计准则和企业会计制度及其补充规定。 2.2 会计年度 本公司的会计期间采用公历制，即自日历１月１日至１２月３１日为一个会计年 度。 2.3 记账本位币 本公司以人民币为记账本位币。 2.4 记账基础和计价原则 本公司以权责发生制为记账基础,以实际成本为计价原则。各项财产在取得时按 实际成本计量，其后如果发生减值，按企业会计制度规定计提相应的减值准备。 2.5 外币业务核算方法 本公司对发生的外币业务，以业务发生当日的汇率（指由中国人民银行公布的 外币市场汇价中间价，下同）将外币折算成人民币记账；期末对各种外币账户的外 币余额按期末日汇率进行调整，调整后的人民币金额与原账面金额之间的差额作为 汇兑损益，除与购建固定资产有关的专用借款产生的汇兑损益，在该资产达到预定 可使用状态前予以资本化、计入资产成本外，属于筹建期间发生的汇兑损益于发生 时计入长期待摊费用，于本公司开始生产经营的当月一次计入损益；属于正常生产 经营期间发生的汇兑损益，则直接计入当期损益。 2.6 现金等价物的确定标准 39 本公司将持有的期限短(一般是指从购买日起三个月内到期)、流动性强、易于 转换为已知金额现金、价值变动风险很小的投资列作现金等价物。 2.7 短期投资核算方法 2.7.1 本公司的短期投资按取得时实际支付的全部价款扣除其中包含的已宣告 但尚未领取的现金股利或利息入账。短期投资持有期间所收到的股利或利息等冲减 投资成本；处置时按实际收到的价款扣除账面成本后的差额确认为投资收益或损失， 计入当期损益。 2.7.2 期末本公司对短期投资按成本与市价孰低计量，采用单项比较法对市价 低于成本的差额，计提短期投资跌价准备，并计入当期损益。 2.8 坏账核算方法 2.8.1 本公司对坏账损失采用备抵法核算，期末对应收款项（包括应收账款和 其他应收款）按账龄分析法计提坏账准备，并计入当期损益。期末按应收款项各级 账龄的余额和下列比例计提坏账准备： 账龄 计提比例 1 年以内 5% 1—2 年 20% 2—3 年 50% 3 年以上 100% 2.8.2 本公司确认坏账的标准为：当债务人破产或者死亡，以其破产财产或者 遗产清偿后，仍然无法收回时；或当债务人逾期未履行其清偿责任，且具有明显特 征表明无法收回时，经公司董事会批准确认为坏账损失，冲销原提取的坏账准备； 坏账准备不足冲销的差额，计入当期损益。 2.9 存货核算方法 2.9.1 本公司的存货主要包括原材料、在产品、库存商品、委托加工材料、包 装物和低值易耗品等。存货购建时按实际成本入账，发出时以加权平均法计价，包 装物、低值易耗品在领用时按一次摊销法摊销。 2.9.2 期末本公司对存货按成本与可变现净值孰低计量，按单个存货项目的可 变现净值低于成本的差额，分项计提存货跌价准备，并计入当期损益。 2.10 长期投资核算方法 2.10.1 本公司对长期股权投资（包括股票投资和其他股权投资），按投资取 得时实际支付的价款扣除其中包含的已宣告但尚未领取的现金股利后的金额或换出 的非现金资产的账面价值加上应支付的相关税费后的价值入账。长期股权投资凡对 被投资单位具有控制、共同控制或重大影响（通常指占被投资单位有表决权资本总 额 20%或 20%以上，或虽不足 20%但有重大影响）的，采用权益法核算；反之，则采 用成本法核算。 40 2.10.2 本公司对长期债权投资（包括债券投资和其他债权投资），按取得时的 实际成本入账。长期债券投资实际成本与债券面值的差额作为债券溢价或折价，长 期债券投资按期计息，同时按直线法在债券存续期间内摊销溢价或折价，计入各期 损益。 2.10.3 期末本公司对长期投资按账面价值与可收回金额孰低计量，对单项投 资由于市价持续下跌或被投资单位经营状况恶化等原因导致其可收回金额低于账面 价值的差额，分项提取长期投资减值准备，并计入当期损益。 2.11 固定资产计价和折旧方法 2.11.1 本公司的固定资产是指使用期限超过一年，单位价值在人民币 2,000 元以上，为生产商品、提供劳务、出租或经营管理而持有的有形资产。固定资产以 取得时的实际成本为原价入账，以年限平均法计提折旧。在不考虑减值准备的情况 下，按固定资产的类别、估计的经济使用年限和预计的净残值（原价的 4%或 10%） 分别确定折旧年限和年折旧率如下：： 折旧年限 年折旧率 房屋及建筑物 20-50 1.92%-4.5% 机器设备 5-15 6.4%-9% 运输设备 5-10 9.6%-19.2% 办公及其他设备 5-10 9.6%-19.2% 在考虑减值准备的情况下，按单项固定资产扣除减值准备后的账面净额和剩余 折旧年限，分项确定并计提各期折旧。 2.11.2 期末本公司对固定资产按账面价值与可收回金额孰低计量，对单项资 产由于市价持续下跌、技术陈旧、损坏或长期闲置等原因，导致其可收回金额低于 账面价值的差额，分项提取固定资产减值准备，并计入当期损益。 2.12 在建工程核算方法 2.12.1 本公司的在建工程按工程项目分别核算，以实际发生的全部支出入账， 并在工程达到预定可使用状态时，按工程全部成本结转固定资产。与购建在建工程 直接相关的借款利息支出和外币折算差额等借款费用，在工程项目达到预定可使用 状态前予以资本化，计入工程成本；在工程项目达到预定可使用状态后，计入当期 损益。 2.12.2 期末本公司对在建工程按账面价值与可收回金额孰低计量，对单项资 产可收回金额低于账面价值的差额，分项提取在建工程减值准备，并计入当期损益。 2.13 无形资产计价和摊销方法 2.13.1 本公司的无形资产是指为生产商品、提供劳务、出租或经营管理而持 有的没有实物形态的非货币性长期资产，主要包括土地使用权、专利权、非专利技 41 术、商标权等。无形资产按取得时的实际成本入账，在其预计使用期限内分期平均 摊销，计入各摊销期损益。 2.13.2 期末本公司对无形资产按账面价值与可收回金额孰低计量，按单项资 产预计可收回金额低于其账面价值的差额，分项提取无形资产减值准备，并计入当 期损益。 2.14 长期待摊费用和摊销方法 本公司的长期待摊费用是指已经支出、但将于正常生产经营后摊销或摊销期超 过一年的各项费用，主要包括开办费、租入固定资产的改良支出等。长期待摊费用 除开办费在开始生产经营当月一次计入损益外，均在各项目的预计受益期间内平均 摊销，计入各摊销期的损益。 2.15 预计负债 当与或有事项相关的义务同时符合以下条件时，本公司将其确认为预计负债：(1) 该义务是本公司承担的现时义务；(2)该义务的履行很可能导致经济利益流出本公 司；(3)本公司对该义务的金额能够可靠地计量。 2.16 借款费用 本公司的借款费用是指因借款而发生的利息、折价或溢价的摊销、外币借款汇 兑差额、以及借款手续费等辅助费用。属于发生的与固定资产购建有关的专门借款 的借款费用，在固定资产达到预定可使用状态前按规定应予以资本化的，计入固定 资产成本；固定资产达到预定可使用状态后发生的专门借款费用以及其他按规定不 能予以资本化的各种借款的借款费用，属于筹建期间的，计入长期待摊费用，并于 本公司开始正常生产经营的当月一次计入损益；属于生产经营期间的，计入财务费 用，列作当期损益。 2.17 收入确认原则 2.17.1 本公司的商品销售在商品所有权上的主要风险和报酬已转移给买方， 本公司不再对该商品实施继续管理权和实际控制权，与交易相关的经济利益很可能 流入企业，并且与销售该商品相关的收入和成本能够可靠地计量时，确认营业收入 的实现。 2.17.2 本公司提供的劳务在同一会计年度开始并完成的，在劳务已经提供， 收到价款或取得收取价款的证据时，确认营业收入的实现；劳务的开始和完成分属 不同会计年度的，在劳务合同的总收入、劳务的完成程度能够可靠地确定，与交易 相关的价款能够流入，已经发生的成本和为完成劳务将要发生的成本能够可靠地计 量时，按完工百分比法确认营业收入的实现；长期合同工程在合同结果已经能够合 理地预见时，按结账时已完成工程进度的百分比法确认营业收入的实现。 2.17.3 本公司让渡资产使用权取得的利息收入和使用费收入，在与交易相关 的经济利益能够流入企业，且收入的金额能够可靠地计量时，确认收入的实现。 42 2.18 所得税的会计核算方法 本公司所得税的会计核算采用应付税款法。 2.19 合并会计报表的编制方法 2.19.1 合并范围的确定原则：本公司根据国家财政部印发的有关文件的规定， 对拥有控制权的子公司及拥有共同控制权的合营公司，除已关停并转、宣告清理或 破产、准备近期售出而短期持有等特殊情况以及对合并而言影响微小者外，均纳入 合并会计报表范围。 2.19.2 合并会计报表的方法：本公司的合并会计报表系以母公司和纳入合并 范围的各下属公司的会计报表以及其它有关资料为依据，在对各公司之间的投资、 所有重大交易、往来及结余款项作出抵销后，合并各项目数额编制而成。少数股东 所占的权益和损益，作为单独项目列示于合并会计报表内。对合营公司的会计报表 采用比例合并法合并。 2.19.3 报告期内购买、出售子公司的处理：本公司对报告期内购买的子公司， 将其自购买日起至报告期末日止的相关收入、成本、利润纳入合并利润表；对报告 期内出售的子公司，将其自报告期初日起至出售日止的相关收入、成本、利润纳入 合并利润表。本公司对报告期内购买、出售的子公司，在期末编制合并资产负债表 时，不调整合并资产负债表的期初数。本报告期内购买、出售子公司的情况详见本 会计报表附注 5.43。 3．税（费）项 3.1 增值税 本公司按产销商品或提供劳务的增值额计缴增值税，主要商品和劳务的增值税 税率为 17%。 3.2 营业税 本公司按应税营业收入的 5%计缴营业税。 3.3 所得税 本公司按应纳税所得额和当期适用之税率计缴所得税，所得税税率为 15%。 3.4 教育费附加 本公司按当期应交流转税的 3%计缴教育费附加。 4. 控股子公司及合营企业 序 注册资本 投资额(万元) 占股比例 号 子公司及合营企业全称 (万元) 经营范围 1 上海双重包缝机有限公司 1,200 生产、开发、销售包缝机 840 70% 2 上海上工进出口有限公司 3,200 机电设备、仪表仪器等进出口 2,880 90% 3 上海工缝房地产发展有限公司 500 房地产开发、销售咨询、物业管理 450 90% 43 4 上海四方同济净水有限公司 1,055 饮用水生产、销售及相关技术开发 638 60.47% 5 长沙华日生化实业有限公司 2,500 柠檬酸系列产品、润滑油、凡士林 2,250 90% 6 上海飞人进出口有限公司 1,000 缝纫设备及其他机电产品的进出口 900 90% 7 上海上原科技开发有限公司 600 新型缝制设备设计、开发 420 70% 8 上海上工佳荣衣车有限公司 400 缝纫机及配件的销售.装配加工 220 55% 9 上海上工方天机械有限公司 300 工业缝纫机及其配件的生产和销售 180 60% 10 上海上工兴达衣车机械有限公司 310 曲折缝系列工业缝纫机的生产.销售 210 67.74% 11 上海上工企业管理有限公司 100 企业管理.生产销售缝制设备零部件 90 90% 12 上海蝴蝶进出口有限公司 1,000 各类缝制设备.机电产品等进出口 900 90% 13 上海申贝办公机械有限公司 5,000 办公机械设备的生产和销售 2,500 50% 14 上海上工松达机械有限公司 300 生产、销售缝纫设备及配件 195 65% 15 上海上工佳源机电有限公司 300 生产、销售缝纫设备及配件 168 56% 16 上海上工资产经营发展有限公司 3,000 实业投资﹑管理咨询等 2,700 90% 17 上海宝灵工程设备成套有限公司 55 机电设备、五金交电、汽配等 49.5 90% 18 上海永德经济发展有限公司 200 机电设备、家用电器等销售 160 80% 19 上海富华轻机有限公司 $100 生产销售服装机械、贸易代理 $55 55% 20 上海工业缝纫机物产总公司 460 缝制设备零件、金属材料及汽配等 460 100% 21 南通上工缝纫机有限公司 80 缝制设备及零件等 52 65% 22 无锡上工缝纫机有限公司 50 缝制设备及零件等 40 80 上述第 1-16 家子公司已纳入本年度合并会计报表范围,其中第 7 家子公司上海上 原科技开发有限公司期末净资产为负数，本公司对其的长期投资余额已减至零，因 该公司未出现无法持续经营的情况，故仍将其纳入合并报表范围。 第 17-22 家子公司由于资产规模和损益金额对本公司整体影响较小，故未纳入合 并范围。 5. 会计报表主要项目的注释 5.1 货币资金 项目 期末数 期初数 原币 (折合)人民币 原币 (折合)人民币 现金 - 345,226.36 - 259,661.97 银行存款: 美元 41,112,734.32 340,277,790.47 2,031,420.01 16,814,672.82 日元 2,620,717.38 202,484.48 1,723.00 118.94 人民币 - 282,756,008.75 - 227,732,367.11 银行存款小计 623,236,283.70 244,547,158.87 其他货币资金 - 12,028,774.59 25,500.00 635,610,284.65 244,832,320.84 期末数比期初数增加 59.61%，主要系本年度本公司增发 B 股募集资金所致,详见 附注 5.28 股本说明。 上述银行存款期末数中,有 490 万美元和 25 万元人民币的银行定期存单已经作为 质押物,向银行取得了 2,537.5 万元的短期借款. 44 上述其他货币资金期末数主要系公司为办理保理业务而存于银行的保证金. 5.2 短期投资 期末数 期初数 账面余额 跌价准备 账面净额 账面余额 跌价准备 账面净额 股票投资 - - - 141,500.00 - 141,500.00 基金投资 200,000.00 - 200,000.00 - - - 债券投资 210,620.00 - 210,620.00 215,988.56 - 215,988.56 410,620.00 - 410,620.00 357,488.56 - 357,488.56 5.3 应收票据 期末数 期初数 银行承兑汇票 1,400,000.00 140,000.00 商业承兑汇票 68,823,932.20 58,852,443.59 70,223,932.20 58,992,443.59 5.4 应收账款 5.4.1 合并数 账 龄 期末数 期初数 账面余额 比例 坏账准备 账面余额 比例 坏账准备 (%) (%) 1 年以内 241,393,963.77 71.66 12,067,858.28 200,785,959.72 64.24 10,039,451.43 1-2 年 37,223,888.12 11.05 7,444,777.64 34,182,304.35 10.94 6,836,460.91 2-3 年 20,634,913.15 6.13 10,317,456.57 18,923,124.42 6.05 9,461,562.21 3 年以上 37,613,361.14 11.17 28,930,947.90 58,653,681.39 18.77 54,404,402.20 336,866,126.18 100.00 58,761,040.39 312,545,069.88 100 80,741,876.75 净额 278,105,085.79 231,803,193.13 5.4.2 母公司 账 龄 期末数 期初数 账面余额 比例 坏账准备 账面余额 比例 坏账准备 (%) (%) 1 年以内 157,393,248.82 77.56 7,869,662.44 109,964,347.30 70.4 5,498,217.37 1-2 年 18,387,531.99 9.06 3,677,506.40 8,655,796.38 5.54 1,731,159.29 2-3 年 7,747,226.96 3.82 3,873,613.48 8,315,630.88 5.32 4,157,815.44 3 年以上 19,408,573.65 9.56 10,726,160.41 29,268,539.05 18.74 29,268,539.05 202,936,581.42 100.00 26,146,942.73 156,204,313.61 100.00 40,655,731.15 净额 176,789,638.69 115,548,582.46 上述合并应收账款期末数中，无持有本公司 5%(含 5%)以上表决权股份的股东单 位欠款。 应收账款合并期末数中前五名金额合计为 80,115,465.72 元，占合并应收账款 45 总额的 23.78%。 应收账款母公司期末数中前五名金额合计为 63,249,029.39 元，占母公司应收 账款总额的 31.17%。 上述一年以内应收账款期末数中,含 4,000 余万元已经作为质押物,向银行取得 了 4,000 万元的短期借款. 上述三年以上应收账款期末数中,含有 10,853,016.57 元期末计提的坏账比例为 20%，坏账准备金额为 2,170,603.31 元。详细原因详见本附注 9。 5.5 其他应收款 5.5.1 合并数 账 龄 期末数 期初数 账面余额 比例 坏账准备 账面余额 比例 坏账准备 (%) (%) 1 年以内 42,236,497.62 53.69 2,127,895.24 38,656,037.70 43.95 1,932,801.90 1-2 年 13,579,748.53 17.26 2,715,949.71 20,111,483.13 22.86 4,022,296.63 2-3 年 7,227,898.24 9.19 3,613,949.13 5,132,927.70 5.84 2,566,464.00 3 年以上 15,615,931.81 19.85 15,615,931.81 24,062,112.88 27.35 22,390,700.96 78,660,076.20 100.00 24,073,725.89 87,962,561.41 100 30,912,263.49 净额 54,586,350.31 57,050,297.92 5.5.2 母公司 账 龄 期末数 期初数 账面余额 比例 坏账准备 账面余额 比例 坏账准备 (%) (%) 1 年以内 39,539,087.65 60.40 1,976,954.39 37,541,640.34 55.13 1,877,082.03 1-2 年 8,244,171.38 12.59 1,648,834.28 9,365,502.35 13.75 1,873,100.47 2-3 年 6,260,035.25 9.56 3,130,017.63 3,594,768.65 5.28 1,797,384.33 3 年以上 11,419,900.52 17.44 11,419,900.52 17,596,316.37 25.84 17,596,316.37 65,463,194.80 100.00 18,175,706.82 68,098,227.71 100 23,143,883.20 净额 47,287,487.98 44,954,344.51 上述其他应收款期末数中，无持有本公司 5%(含 5%)以上表决权股份的股东单位 欠款。 上述其他应收款期末数中,含有对应收关联方的款项共计 18,726,200.41 元,详 见本会计报表附注 6.4。 其他应收款合并期末数中前五名金额合计为 27,537,272.12 元，占合并其他应 收款总额的 35.01%。 其他应收款母公司期末数中前五名金额合计为 27,537,272.12 元，占母公司其 他应收款总额的 42.07%. 46 5.6 预付账款 账 龄 期末数 期初数 账面余额 比例(%) 账面余额 比例(%) 1 年以内 47,889,431.11 98.19 56,991,548.40 96.87 1-2 年 515,995.35 1.06 837,658.04 1.43 2-3 年 17,786.50 0.04 1,001,075.23 1.70 3 年以上 350,107.13 0.72 - - 48,773,320.09 100.00 58,830,281.67 100.00 上述预付账款期末数中，无持本公司 5%(含 5%)以上股份的股东单位的款项。 5.7 应收补贴款 期末数 期初数 消费税返还 20,622.23 - 出口退税 9,911,739.42 5,523,373.39 9,932,361.65 5,523,373.39 期末数比期初数增加 79.82%，主要系本年度出口业务增加,导致应收的出口退税 款增加所致. 5.8 存货 期末数 期初数 项目 账面余额 跌价准备 账面余额 跌价准备 原材料 58,591,558.50 13,373,456.82 51,345,447.60 16,205,409.96 在产品 27,891,366.93 1,986,035.12 29,866,250.52 5,141,874.99 库存商品 105,638,918.77 16,965,098.91 130,846,998.18 16,513,785.04 开发产品 63,107.71 - 10,380,646.82 - 委托加工材料 1,717,385.99 - 2,844,492.64 638,296.90 低值易耗品 1,258,891.26 3,584.24 1,633,019.26 - 195,161,229.16 32,328,175.09 226,916,855.02 38,499,366.89 净额 162,833,054.07 188,417,488.13 5.9 待摊费用 项目 期末数 期初数 租金 16,100.00 20,800.00 其他 28,024.66 4,562.00 44,124.66 25,362.00 47 5.10 长期股权投资 5.10.1 合并数 期末数 期初数 账面余额 减值准备 账面净额 账面余额 减值准备 账面净额 股票投资 27,506,819.40 － 27,506,819.40 27,850,179.40 － 27,850,179.40 其他股权投资 132,964,098.49 1,808,033.99 131,156,064.50 161,894,261.41 6,439,923.35 155,454,338.06 其中: 对合营企业投资 10,879,473.71 － 10,879,473.71 12,284,817.15 － 12,284,817.15 对其他企业投资 53,991,190.32 1,808,033.99 52,183,156.33 72,385,560.06 6,439,923.35 65,945,636.71 合并价差 68,093,434.46 － 68,093,434.46 77,223,884.20 － 77,223,884.20 160,470,917.89 1,808,033.99 158,662,883.90 189,744,440.81 6,439,923.35 183,304,517.46 (1) 股票投资 期末数 股票名称 股份类别 股数 占股比例 账面余额 减值准备 期末净额 华联商厦股份 法人股 72,199.00 and Internet login designated by China Securities Regulatory Committee to carry the Company’s annual report: http://www.sse.com.cn Place for consulting the Company’s annual report: BOD Office of SCG (6) Authorized place for stock exchange: Shanghai Stock Exchange Stock code: A shares – 600843 abbreviated as Shanggong B shares – 900924 abbreviated as Shanggong B (7) Other information: ① First-time registration date: December 16, 1993 Registration institution: Shanghai Municipal Industrial and Commercial Admin. Registration variation date: August 22, 1997 Variation institution: Shanghai Municipal Industrial and Commercial Admin. ② Business license registration No.: QGHZZ019029 ③ Tax registration No.: GSHZ310048132210544 (8) Public accountants contracted by the Company Domestic auditor: Shanghai Zhonghua Certified Public Accountants 12F, 550 Yan’an Road (E), Shanghai International auditor: BDO Internationa Certified Public Accountants 12F, 550 Yan’an Road (E), Shanghai (9) Advisor on legal affairs: Shanghai Zhendan Law Office 16/F, 1688 Sichuan Road (N), Shanghai 4 Financial and Business Highlights 1. Business highlights during report year: RMB’ Total profit 20,031,894.08 Net profit 14,595,602.55 Net profit after nonrecurrent account profit/loss -49,891,385.47 Principal operating profit 109,010,168.83 Other operating profit 14,413,400.19 Administrative profit -42,678,480.34 Investment income 17,933,050.49 Subsidies 2,518,176.16 Non-operating net balance of payment 42,259,147.77 Net cash flows generated from business operations -41,963,006.97 Net increase in cash and cash equivalents 390,777,963.81 Notes: the deducted terms of non-recurrent account profit/loss (E.I.T. implication excluded) involve the following: subsidies RMB 2,466,397.68, non-operating income RMB 53,489,024.31, non-operating cost RMB 10,783,593.82, investment income RMB 10,587,686.39 and reverse of anterior depreciation provision RMB 8,727,473.46. 2. The impact of IFRS adjustments on the PRC Statutory Financial Statements as following: 2003 Net profit Net assets RMB’000 RMB’000 As per the PRC statutory financial statements 14,596 859,868 IFRS adjustments (359) - Recognize loss - - Elimination of unrealized gains/loss on transaction to associates (543) (543) - Write off of capitalized expenses 294 - As restated after IFRS adjustments 13,988 859,325 3. The Company’s main accounting data and financial index for the last three years (combined statements): 5 RMB’ Item 2003 2002 2001 Principal operating income 866,798,366.22 875,299,752.11 916,259,944.36 Net profit 14,595,602.55 13,161,566.40 45,840,041.90 Total assets 1,735,205,977.66 1,354,455,716.34 1,317,411,199.56 Shareholders’ equity (minority interest excluded) 859,868,516.39 514,991,748.36 502,565,328.12 Earning per share (diluted) 0.0374 0.0521 0.1816 Earning per share (weighted) 0.0489 0.0521 0.1816 EPS after non-recurrent account profit/loss -0.1278 0.0235 0.1619 Net assets value per share 2.2029 2.0398 1.9906 Adjusted net assets value per share 2.1779 2.0088 1.9745 Net cash flows per share generated from -0.1075 0.1121 0.0133 operating activities Return on net assets (diluted, %) 1.6974 2.5557 9.1212 Return on net assets (weighted, %) 2.6202 2.5850 9.4605 Return on net assets (weighted average after -8.9565 1.1643 8.4342 non-recurrent gain/loss, %) Supplementary profit statement in report year (calculations following the Circular No.9 Rules of Information Release for Public Listed Companies) Item Return on Net Assets (%) Earning per Share (RMB) Diluted Weighted Diluted Weighted Principal operating profit 12.68 19.57 0.2793 0.3650 Administrative profit -4.96 -7.66 -0.1093 -0.1429 Net profit 1.70 2.62 0.0374 0.0489 Net profit after non-recurrent -5.80 -8.96 -0.1278 -0.1670 Account profit/loss 4. Changes in shareholders’ equity: RMB’ Item Share Capital Capital Reserve Statutory Statutory Profits Total Surplus Public Welfare Undistributed Shareholders’ Reserve Fund Fund Equity Opening 252,466,370.00 257,092,620.64 12,295,327.80 5,779,351.61 991,046.43 514,991,748.36 amount Current 137,869,958.00 222,753,452.04 10,439,045.92 5,587,835.27 4,156,556.58 increase Current 37,869,958.00 decrease Ending 390,336,328.00 441,976,114.68 22,734,373.72 11,367,186.88 5,147,603.01 859,868,516.39 amount Reasons Capitalization of Premium of B Current-year Current-year Current-year reserve funds stock issuance amortization amortization profits’ increase Additional Capitalization of issuance of 100 reserve funds million B shares 6 5. Performance charts: Production of sewing machines (‘000) Principal operating income (RMB’000,000) 800 714.4 1000 916.26 866.8 875.3 700 600 541.4 541.9 558.1 Industrial sewing 800 450.2 machines 500 Domestic sewing 600 400 322.8 machines 300 235.3 400 172.5 Total production 200 91.2 200 100 0 0 2003 2002 2001 2003 2002 2001 Export incomes (USD’000,000) Exports’ proportion in total sale value (%) 42 60 42 45.14 46.37 42.56 40 40 40 38 20 38 0 36 2003 2002 2001 2003 2002 2001 7 Variation of Stock Capital and Information about Shareholders 1. Variation of share capital: (1) Changes in share capital (as of December 31, 2003): Opening Increase/decrease in the report period Ending volume volume Ration Bonus Shares by Enlarged Others Total shares shares public issuance reserve Non-floating shares 1. Founders’ shares Including: State-owned shares 117,018,082 16,272,332 -8,535,874 7,736,458 124,754,540 Shares owned by 9,348,288 2,682,624 8,535,874 11,218,498 20,566,786 domestic legal persons Shares owned by foreign legal persons 2. Collected legal 13,000,000 1,950,000 1,950,000 14,950,000 person shares 3. Shares for staff 4. Non-floating B 100,000,000 100,000,000 100,000,000 shares Total non-floating 139,366,370 20,904,956 100,000,000 120,904,956 260,271,326 shares Floating shares 1. Floating A shares 15,600,000 2,340,002 2,340,002 17,940,002 2. B shares 97,500,000 14,625,000 14,625,000 112,125,000 3. B shares issued abroad 4. Others Total floating shares 113,100,000 16,965,002 16,965,002 130,065,002 Total stock 252,466,370 37,869,958 100,000,000 137,869,958 390,336,328 (2) Issuance and listing of shares: Classification Date of issuance Issuance price per Issued volume of shares Date of listing share (RMB’) A shares 10/10/1993-30/11/1993 5.80 22,000,000 (10,000,000 legal 11/03/1994 person shares included) B shares 08/01/1994-12/01/1994 3.654 (US$ 0.42) 75,000,000 18/01/1994 During report year, as fulfillment of the resolution of capitalizing reserve fund to appropriate new stock among shareholders agreed by the Company’s general meeting of shareholders (at a ratio of 1.5:10 on basis of the existing 252,466,370 shares), Shanggong Co., Ltd. set respectively June 2, 2003 and June 3, 2003 as register date and ex-right date of A shares stock equity. (June 5, 2003 as register date of B shares stock right and June 2, 2003 as last listing date of B shares.) As a result, the total stock capital of the Company increased to 290,336,328 shares at the end of report year. In line with the approval ZJFXZ (2003) No. 133 approbated by China Securities Regulatory Commission, the Company issued 100,000,000 B shares among elected foreign institutional investors priced USD 0.428 per B share during the listing period from Nov. 7, 2003 to Nov. 11, 2003. These newly-listed B shares are non-floatable in the next six months before they can be circulated on May 13, 8 2004. As result of this B stock interest expansion, the Company’s total stock capital increased to 390,336,328 shares, whose segments are detailed as below: Before enlarged listing After enlarged listing Quantity Proportion Quantity Proportion 1. Non-floating stock Founders’ stated-owned shares 116,245,570 40.04% 116,245,570 29.78% Non-founder state-owned shares 8,508,970 2.93% 8,508,970 2.18% Non-founder legal persons’ shares 20,566,786 7.08% 20,566,786 5.27% Non-founder domestic legal persons’ 14,950,000 5.15% 14,950,000 3.83% shares Domestic-floating B shares 100,000,000 25.62% Total non-floating stock 160,271,326 55.20% 260,271,326 66.68% 2. Floating stock Floating A shares 17,940,002 6.18% 17,940,002 4.60% B shares 112,125,000 38.62% 112,125,000 28.72% Total floating stock 130,065,002 44.80% 130,065,002 33.32% Total stock 290,336,328 100% 390,336,328 100% 2. Information about shareholders: (1) Number of shareholders at the end of report year On December 31, 2003, the Company has 29,017 registered shareholders, among whom 12,676 are A stock shareholders and 16,341 B stock shareholders. (2) Top ten shareholders (as of December 31, 2003) Shareholder Increase Quantity as of Proportion Category Quantity in Classification /decrease Dec. 31, 2003 (%) pawn or frozen Shanghai Light Industry -772,512 116,245,570 29.78 Non-floating No State-owned Holding (Group) Company Honour Force Investments +28,037,341 28,037,341 7.18 Non-floating Unknown B shares Ltd. Shanghai International Trust +11,218,498 20,566,786 5.27 Non-floating No State-owned and Investment Company legal person Shenyin & Wanguo +19,500,000 19,500,000 4.996 Non-floating Unknown B shares Securities Co., Ltd. Normal Win Assets Limited +12,000,000 12,000,000 3.07 Non-floating Unknown B shares Main Force Assets Limited +11,000,000 11,000,000 2.82 Non-floating Unknown B shares Mesabi Assets Limited +10,500,000 10,500,000 2.69 Non-floating Unknown B shares Shanghai Industrial Assets +9,300,000 9,300,000 2.38 Non-floating Unknown B shares Management Co., Ltd. (HK) China Great Wall Assets +8,508,970 8,508,970 2.18 Non-floating Unknown State-owned Management Co., Ltd. Bank of China, Shanghai +715,650 5,486,650 1.41 Non-floating Unknown Other legal Branch person (3) Profile of major shareholders who individually hold 10% or more of the Company’s total stock interest: ① Shanghai Light Industry Holding (Group) Company, as Shanggong’s holding shareholder, held 117,018,082 shares of the Company (46.35% of total stock interest) at the beginning of current report year. During report term, the holding shareholder transferred partial stock interest respectively to China Great Wall Assets Management 9 Co. and Shanghai International Trust and Investment Company. As a result, Shanghai Light Industry Holding (Group) Company holds 116,245,570 shares of the Company (29.78% of total stock interest) at the end of report year. With approval of Shanghai Municipal People’s Government, the foundation of Shanghai Light Industry Holding (Group) Company, as state-owned, exclusively invested, limited liability entity, resulted from the restructure and merger of Shanghai Light Industry Bureau and Shanghai No.2 Light Industry Bureau. On Dec. 27, 1995, with approval from Shanghai Municipal Administration Commission for State-owned Assets in the circular HuGuoZiWeiShou (1995) No. 21, the holding shareholder was authorized with general administration of all the state-owned assets then under its control. The holding group, with Zhang Liping as legal representative, owns a registered capital of RMB 3,653,300,000, and its business scope covers the following items: operation and management of state-owned assets within the authorized range and extent by Shanghai Municipal Administration Commission for State-owned Assets, industrial investment and domestic trade (except specific circles). ② There was no relevant transaction relationship between Shanggong Co. and its other nine major shareholders. It remains unknown if any related transactions occurred among top ten shareholders, or anyone among them could be considered as Concerted Parties according to the definition set in the circular . (4) The second major shareholder and the shareholders from the fourth to the eighth are included into the list as elected foreign institutional investors. The newly-issued B shares are non-floatable in six months from Nov. 13, 2003 to May 12, 2004. (5) Top ten floating stock shareholders (as of December 31, 2003): No. Shareholder Quantity at end of Classification report year 1 CBNY S/A PNC/SKANDIA Select Fund/China 1,417,110 B shares Equity AC 2 Lan Yi 1,361,701 B shares 3 Merrill Lynch Far East Limited 611,000 B shares 4 Jiang Yuming 511,100 B shares 5 Shen Guanghai 490,000 B shares 6 Xu Huolin 441,600 B shares 7 Yang Zhongliang 300,000 B shares 8 Naito Securities Co., Ltd. 287,000 B shares 9 Wanguo Securities Co., Ltd. 215,450 B shares 10 Wu Qunjuan 205,000 B shares 10 Information about Directors, Supervisors, Senior Managerial Personnel and Staff 1. Managerial team of the Company Name Position Sex Age Term of Quantity of holding Variation cause Office shares Begin Ending Ni Yonggang Chairman M 56 2003.5-2006.5 6,900 7,935 Stock expansion by capital reserve He Zhongyuan Vice-Chairman M 55 2003.5-2006.5 5,100 5,865 Stock expansion by capital reserve Wang Lixi Exe. Director M 44 2003.5-2006.5 3,000 3,450 Stock expansion by General Manager capital reserve Zhang Exe. Director F 46 2003.5-2006.5 0 575 Taking from open Zongming exchange Fei Fangyu Independent M 55 2003.5-2006.5 2,600 2,990 Stock expansion by Director capital reserve Liu Rende Independent M 58 2003.5-2006.5 0 0 - Director Liu Xiangdong Independent M 53 2003.5-2006.5 0 0 - Director Jia Chunrong Director M 55 2003.5-2006.5 0 0 - Chen Mingqi Director M 49 2003.5-2006.5 0 1,725 Taking from open exchange Shen Yibo Director M 38 2003.5-2006.5 0 0 - Fan Weimin Supervisory M 54 2003.5-2006.5 0 0 - Chairman Sun Zhen Supervisor M 48 2003.5-2006.5 4,600 5,290 Stock expansion by capital reserve Zhuge Huiling Supervisor F 35 2003.5-2006.5 0 0 - Zhang D. G. Manage M 57 2003.5-2006.5 4,600 5,290 Stock expansion by Hengliang Chief Engineer capital reserve Jiang Jinrong Deputy General M 49 2003.5-2006.5 0 0 - Manager Chen Changbao Deputy General M 48 2003.5-2006.5 0 0 - Manager Xu Xiaohui Chief Accountant F 50 2003.5-2006.5 0 0 - Zhang Yifeng Secretary of BOD M 53 2003.5-2006.5 2,390 2,748 Stock expansion by capital reserve Note: The above-mentioned directors, supervisors and high-level managers promise to keep their shares non-floated during their term of office. Directors and Supervisors’ current position in the Company’s shareholder institutions: Name Shareholder Position Term of Office Fan Weimin Shanghai Light Industry Holding Admin. & Party Affairs Jan. 1996 up to (Group) Company Office, Director the present Jia Chunrong Shanghai Shangtou Investment General Manager Aug. 2003 up to Management Co. the present Shen Yibo China Great Wall Assets Creditor Right Management Jan. 2003 up to Management Co. Dept., Director the present 11 Chen Mingqi Shanghai Light Industry Holding Economic Operation Dept., Nov. 2002 up to (Group) Company Vice Manager the present 2. Annual remuneration of the managerial personnel Remuneration policy: actually, the wage and welfare of managerial team is divided into two parts, which are respectively basic salary and bonus. The latter is directly linked with target-oriented performance evaluation in business operation. During report year, the Company’s senior management team consists of 18 directors, supervisors and managers, whose payment totaled RMB 1,112,800. There were nine persons whose annual salary accounted for less than RMB 50,000, seven individuals whose salary ranged between RMB 50,000 and RMB 100,000, and the other two earned more than RMB 100,000 in the year. Three highest-payment BOD members received a total amount of RMB 428,800 from the Company, and the remuneration of three top-salary managers amounted to RMB 251,900. According to the decision by General Meeting of Shareholders, Independent Directors received individually an annual subsidy of RMB 40,000 (taxation included). The Meeting of Executive Directors also decided to pay monthly RMB 600 to each director and supervisor from outside the Company as communication subsidies (except Independent Directors). 3. Position variation and transference of Directors, Supervisors and Managers during report year (1) Election of Directors, Supervisors and Managers ① During report year, the Company completed its re-election of the Board of Director and the Supervisory Committee. On May 20, 2003, the Company’s 2002 Annual General Meeting of Shareholders elected Mr. Ni Yonggang, Mr. He Zhongyuan, Mr. Wang Lixi, Ms. Zhang Zongming, Mr. Chen Mingqi, Mr. Jia Chunrong and Mr. Shen Yibo as Directors, and chose Mr. Fei Fangyu, Mr. Liu Xiangdong and Mr. Liu Rende as Independent Directors of the Fourth Board of Directors of Shanggong Co., Ltd.. The same General Meeting also elected Mr. Fan Weimin and Mr. Sun Zhen as Supervisors. In March 2003, Ms. Zhuge Huiling was elected, by the Company’s Assembly of Staff and Workers, as Employee Representative in Shanggong’s Fourth Supervisory Board. ② On May 20, 2003, the Fourth Board of Directors convened its first meeting and voted Mr. Ni Yonggang and Mr. He Zhongyuan, Mr. Wang Lixi and Ms. Zhang Zongming for Executive Directors. The first two Directors were respectively elected as Chairman and Vice Chairman of the Board. In the same meeting, Mr. Wang Lixi was decided as General Manager. According to nomination of the newly-named General Manager, the BOD also accepted Mr. Zhang Hengliang as Deputy General Manager and Chief Engineer, Mr. Jiang Jinrong and Mr. Chen Changbao as Deputy 12 General Managers, Ms. Xu Xiaohui as Chief Accountant, Mr. Zhang Yifeng as Secretary to BOD and Mr. Gu Genrong as Stock Affairs Representative. ③ On May 20, 2003, Fourth Supervisory Board of Shanggong Co., Ltd. held its first meeting and voted Mr. Fan Weimin for Head of Supervisory Board. (2) Office-leave of anterior officers During report year, Shanggong Co., Ltd. re-elected its Board of Directors and Supervisory Board. Mr. Lei Jie and Mr. Chen Huimin didn’t continue their duty in BOD, nor did Ms. Liu Junlan in Supervisory Board. 4. Staff of the Company At the end of 2003, the Company contracted totally 3,271 employees, among whom, 1,847 persons (composed as following: 1,468 were workers in manufacture sector, 79.48% of currently-at-position persons; 169 engineers or technical, 9.15% of working employees; 56 accounting persons, 43 sales staff, and the rest 11 administration personnel, respectively 3.03%, 2.33% and 6.01% of total working personnel) were actually working at their positions. Classified by intellectual levels, 255 persons were awarded academy college diploma or higher degree, 432 persons with professional title and 20 employees with Ph.D degree, Master degree or superior professional title. The Company had a total number of 3,154 retired persons, whose pension and medical costs were covered by social pension security system. 13 Administration Structure of the Company 1. Overview of the Company’s actual administrative structure Strictly in light of principles stipulated in , , and set by China Securities Regulatory Commission, Shanggong Co., Ltd. attaches priority to continuously perfect the internal administrative structure and standardize its business operations. (1) About shareholder affairs and General Meetings of Shareholders: The Company pays special attention to assure interests of shareholders, especially of medium & minor shareholders. The shareholders enjoy and wield power according to their portion of stock equity, on basis of “Equal-Share-Equal-Interest”. In line with , Shanggong Co., Ltd. normalizes the procedures of calling, convocation and proposal-discussion of shareholders’ general meetings, and practices accumulative voting system on discussing proposals for financing activities. With purpose of protecting legal interest of all shareholders, the Company follows common business principles in all related-party transactions, keeps transparent the pricing foundation and assures related-party shareholders quitting from the vote. (2) Relationship between the holding shareholder and the Company: During report year, the Company set action guidance for the holding shareholder and realized separation from the latter in personnel, assets, finance, mechanism and business operation. The BOD, the Supervisory Committee and other internal organizations are running independently their functions. (3) About Directors and the Board of Directors: The Company elects Directors strictly following director-election procedures in accordance with and arms the Board of Directors with reasonable professional structure. The Directors actively participate in business training, have sufficient knowledge of related laws and regulations, know their right, obligation and responsibility well, and fulfill their duty with conscientiousness, diligence and honesty. The Company also elected three Independent Directors according to . The strategic, auditing, nomination, remuneration & examination sub-committees also run their functions under relative guidance. (4) About supervisors and the Supervisory Board: The personnel organization and structure of the Supervisory Board is in line with the principles in current regulations and laws. All the members strictly run their duty, which is to supervise the accounting affairs of the Company, the legality of duties 14 done by the directors, managers and other senior managerial members, and to protect the legal rights and benefits of the Company itself and of all the shareholders. (5) Efficiency evaluation and stimulus mechanism: All the high-level managerial persons of the Company are elected and screened by a fair competition system. The senior management team regularly reports back on their work to the Board of Directors, to the Assembly of Employees and accepts appraisal of the latter. The performance of all high-level managerial personnel is regularly examined and evaluated by the Company’s HR Department, and the remuneration & examination sub-committee of BOD does annual evaluation for them and determines their payment at the end of every year. (6) About interested parties: The Company soundly considers and respects the legal rights and interests of those interested parties, such as banks and other creditors, employees, consumers, suppliers and the neighborhood community. It also pays much attention to realize its social responsibility and to stimulate the initiative of staff to participate into the management of the entity, with the purpose to promote its own continuous and healthy development. (7) About information release and transparency: The Company appoints the Secretary to BOD to information release, reception of shareholders’ visits and their consultations. In accordance with the laws, regulations and the , the Company releases the information about its administration situation and the variations in shareholders’ equity with authenticity, accuracy, integrity, promptitude, and guarantees equal opportunity for all shareholders to obtain the same information. The Company also rapidly releases detailed information of its major shareholders, real controller, and variations of its stock equity. 2. Fulfillment of duties of Independent Directors of BOD Three Independent Directors of BOD actively attend the meetings of BOD and express independent legal and accounting opinions three times on the Company’s significant events such as business operations, external investment, work transference of senior managers and external guaranty activities. These professional opinions play a positive role in scientific decisions of BOD and protect conscientiously the benefits of the Company and its medium & minor shareholders. Following the rules for the implementation of specific committees of BOD, the remuneration & examination committee convened a meeting to consider the annual appraisal scheme of senior managers of the Company; the strategic decision committee frequently listened to those constructive proposals from program officers about the progress in stock equity acquisition and international M&A; the nomination committee launched activities around the re-election of BOD and submitted a on-time candidate list for the Company’s Fourth Board of Directors; and the audit committee analyzed the Company’s annual auditing statements and offered constructive 15 proposals for business optimization of the Company. 3. Structure separation between the Company and its holding shareholder The Company separates from the holding shareholder in business, human, assets, organization and financial activities. The Company operates independently and completely all its business activities. Shanggong Co., Ltd. runs independent production, auxiliary manufacture, accessory, purchase and sales systems. In respect of personnel and remuneration administration, the Company runs independent labor & personnel management structure and wage system. All senior managers get salary from the Company, and none of them holds administrative positions in the holding shareholder. The Company also owns independently and exclusively all the assets, and holds independent land property and intellectual property right. Besides operating geographically in different location, the Company has established an organic structure totally independent from its holding shareholder. Besides, the Company has independent accounting sector, and accounting system, financial administrative system as well. It also opens its own banking account and pay taxes in conformity with legal provisions. 4. Evaluation and incentive system of senior managerial team The Company elaborates a package of examination and incentive measures for senior managerial team. The remuneration of senior managers of the Company, its sub-companies and subsidiary undertakings is divided into two parts, basic salary and performance bonus. The basic salary consists of a fixed payment with premise that no significant mistake occurs in business activities, and the performance bonus depends on every manager’s performance and his/her business records evaluated with risky contract targets. The Company’s personnel department regularly examines and appraises the performance of all high-level managers, and the remuneration & examination committee of BOD realizes annual comprehensive evaluation and determines the remuneration of every manager on year-end. 5. Some explanations Judging from the consolidated balance sheet, the Company holds its own legal person shares under the article of Long-term Investment in Stock. This situation wouldn’t be resolved soon due to the absence of related regulations to guide the transference of legal person stock equity. 16 Brief Information about Shareholders’ General Meetings During report period, the Company convened 2002 Annual General Meeting of Shareholders and another Provisional General Meeting of Shareholders. 1. 2002 Annual General Meeting of Shareholders On April 19, 2003, Shanggong Co., Ltd. announced the notice to convene its 2002 Annual General Meeting of Shareholders in and , and made public the date, venue and agenda of the meeting. On May 20, 2003, the Company held as scheduled its 2002 Annual General Meeting of Shareholders at Shanghai Film Art Center. Totally 108 shareholders or their trustees attended the meeting, representing 131,309,913 shares, 52.0109% of total stock equity (among the attendants, there were 14 B stock shareholders or trustees who represented totally 803,050 B shares). 2003 Annual General Meeting of Shareholders voted and passed the following resolutions: , , , , , , , and . All the related resolutions were carried in and dated May 22, 2003. 2. 2003 First Provisional General Meeting of Shareholders On the date Nov. 29, 2003, the Company made public the announcement to convene 2003 First Provisional General Meeting of Shareholders, with details of the date, venue and agenda of the meeting in and . On Dec 30, 2003, the 2003 First Provisional General Meeting of Shareholders was gathered at Shanghai Film Art Center, with attendance of 86 shareholders and trustees, holding 199,985,272 shares, 51.2340% of total stock capital (among the attendants were 16 B stock shareholders or trustees with 51,935,463 B shares). The provisional meeting considered and approved five proposals, which were 17 , , , and . Related resolution announcements were published on Jan. 2, 2004 in and . 3. Election and variation of Directors and Supervisors (1) During report year, the Company completed the re-election of BOD and Supervisory Board. On May 20, 2003, 2002 Annual General Meeting of Shareholders voted Mr. Ni Yonggang, Mr. He Zhongyuan, Mr. Wang Lixi, Ms. Zhang Zongming, Mr. Chen Mingqi, Mr. Jia Chunrong and Mr. Shen Yibo as Directors of the Fourth BOD, Mr. Fei Fangyu, Mr. Liu Xiangdong and Mr. Liu Rende as Independent Directors, and Mr. Fan Weimin, Mr. Sun Zhen as Supervisors. In March, 2003, Ms. Zhuge Huiling was voted as Employee Supervisor by the Company’s Staff Assembly. (2) On May 20, 2003, as result of re-election of Board of Directors and Supervisory Board, Mr. Lei Jie and Mr. Chen Huimin quitted their duty from BOD, and Ms. Liu Junlan also left the Supervisory Board. 18 Report by the Board of Directors 1. Summary and analysis of the Company’s business performance During the year 2003, facing varied difficulties such as the epidemic of SARS, the high-temperature climate and lack of electricity, the price rise of raw and other materials and the tight competition of industrial counterparts, the Company took a series of measures: a. to accelerate the product structure adjustment, the Company adjusted on its own initiative the production volume of common sewing equipments, and reduced the stock of goods to achieve the production-and-marketing approximating to 100%; b. to enforce the building of quality-control system, as positive reaction to the demands of customers, the Company focused in technological progress of its core product line, the new hi-speed lockstitch sewing machines and improved the quality of products; c. to strengthen the R&D of new products, the Company completed the development of hi-speed oil-free-lubrication automatic lockstitch sewing machine and other four new products, filed patent application for the creation points in these new products, and created environments to turn these new products into benefit-growth-point; to accelerate preparations for international M&A, the Company actively gained support from all parties, finished the capital-collection from foreign institutional investors, elaborated and perfected business-integration program of international M&A, and made complete arrangements for resource disposition and potential development of R&D, production, sale and auxiliary system. As a result, the Company realized a principal operating income of RMB 866,800,000, a light decrease of 0.97%; a principal operating profit of RMB 109,010,000, 29.31% less than that of the anterior period; and a net profit of RMB 14,596,000, an increase of 10.9%. (1) Structure of principal operations and current business situation The Company, as manufacturer of sewing machines & equipments, is mainly engaged in production and sale of sewing machines, related components, special-purposed sewing equipments, technological development and advisory services. (a) During report year, the Company manufactured and sold respectively 91,182 and 92,414 industrial sewing machine units, among which the volume of new models represented 59.7% of total industrial sewing machinery output. And the production and sale volumes of domestic sewing machines totaled respectively 450,207 and 451,039 units. The export arm of the Company realized a sale valued USD 42,561,800, 40.61% in total sale value and approximately the same of the year 2002. (b) Composition of principal operating income and profit a. Principal operating income of report year accounted for RMB 866,800,000: RMB ‘000 Composition Principal operating Increase/ Principal operating Increase/ Gross profit rate Increase/ 19 income decrease cost decrease decrease Sewing machines 641,680 -2.12% 566,930 5.52% 11.65% -35.46% Office appliances 187,030 9.04% 160,730 7.44% 14.06% 10.02% Biochemical products 21,180 -12.80% 20,620 -1.10% 2.64% -81.36% Real estates 10,940 -38.44% 4,470 -35.78% 59.14% -2.78% Others 5,970 -2.45% 3,240 -16.92% 45.73% 26.08% Including: related transactions Price-fix policy Necessity & continuance of related transactions Sewing machines and office appliances are both sectors whose manufacture and sale value respectively contributed 10% or more to principal operating income and principal operating profit of the Company. b. During report year, the Company realized principal operating profit valued RMB 109,010,000, in which: By sector or products Proportion in principal operation profits Sewing machines 68.21% Office appliances 23.47% Real estates 5.56% Total 97.24% c. Principal operating income by regional division RMB ‘000 By region Principal operating income Increase/decrease (%) Domestic 480,520 -10.90 Abroad 386,280 14.97 (2) Business situation of major subsidiary undertakings and associated undertakings: RMB ‘000 Company Business Net assets Total assets Registered Stock equity Net profits scope capital proportion Shanghai Baoling Complete Trading 592 2,206 550 90% 30 Engineering Equipment Co. Shanghai Yongde Economic Trading 1,403 5,812 2,000 80% 8 Development Co., Ltd. Shanghai Fuhua Light Trading 6,886 9,666 5,760 55% 40 Industrial Machinery Co., Ltd. Shanghai Industrial Sewing Trading 4,595 4,669 4,650 100% 3 Machines Materials Trading Co Nantong Shanggong Sewing Trading 844 4,880 800 65% 10 Machines Co., Ltd. Wuxi Shanggong Sewing Trading 367 655 500 80% -44 Machines Co., Ltd. None among these associated undertakings contributes 10% or more to net profit of the Company. (3) Main suppliers and customers As the Company is mainly engaged in manufacture and sale of sewing machinery, its main suppliers mainly consist of suppliers of sewing machinery auxiliaries. The first five suppliers totaled a purchase valued RMB 16,332,000, 28.81% in total purchase of the Company. During report period, the first five customers contributed a sale of RMB 65,187,800, 10.16% in total sale of sewing machinery. (4) Difficulties emerged in business and solution proposals With China’s entry into WTO and its tariff dropping, the price of raw materials, iron and steel, has risen, and the marketing competition is gradually tightening. In the meantime, the company’s R&D ability and capacity to exploit new business is still 20 backward in comparison with its foreign counterparts. Facing the challenges, the Company actively implemented its strategy to develop international market. By means of financial creation, Shanggong Co., Ltd. tried to achieve the integration of financing operations and industrial restructure, with purpose of availing international collaboration to enhance all-sidedly its own competitivity and extricate itself from domestic low-leveled competition, through manifold measures such as assets transplant and dock, absorption of intellectual recourses and cooperation. 2. Investments in report year (1) Utilization of funds raised in report year From Nov. 7, 2003 to Nov. 11, 2003, the Company issued 100,000,000 B shares to elected foreign institutional investors and collected RMB 322,639,964.52 after issuance cost. The projects utilizing the collected funds are as follows: RMB’000 No Committed investment projects Real investment Planning investment sum Real . projects Total 2003 2004 investment sum 1 Stock-equity acquisition of DA Co. Same as committed 200,960 146,790 54,170 - project 2 Establishing production line of Same as committed 195,000 120,000 75,000 - computer-controlled project special-purposed industrial sewing machines with utilization of tech. imported from DA Co. Total 395,960 266,790 129,170 - The capital collection of B stock additional issuance dated from Nov. 7, 2003 to Nov. 11, 2003. Since the announcement date of the issuance result, the Company began the stock equity transfer negotiation with the holding shareholder of DA Co.. Both parts plan to reach acquisition framework in first quarter of 2004 and sign stock equity agreement in first half of 2004. (2) Investment projects with non-raised funds in report year In line with the decision by the 25th meeting of the Third Board of Directors, the Company invested RMB 27,000,000 to found Shanghai Shanggong Assets Management Co., Ltd. and occupied 90% stock equity of the subsidiary undertaking. This company, with registered capital of RMB 30,000,000, covers industrial investments, assets operation, investment management, enterprise M&A, management and consulting services, business information services, sale of mechanical and electrical equipments, sewing machinery and components, and sale of metallic materials. 3. Financial status of the Company • Total assets up to end of report year valued RMB 1,735,205,977.66, an increase by RMB 380,750,261.32 and 28.11% as compared with the beginning data. The increase was mainly due to B shares’ additional issuance during report year. 21 • The ending long-term liability amounted to RMB 11,045,479.67, a decrease by RMB 7,518,575.24 and 40.5% to the beginning of the period. The principal cause lay in that the liabilities under one year RMB 7,400,000 are calculated under the article of Current Liabilities. • The ending shareholders’ equity amounted to RMB 859,868,516.39, RMB 344,876,768.03 and 66.97% more than that of the opening amount. The main cause is known as the enlarged issuance of B shares (RMB 322,000,000) and the accumulation in current-term profits. • The end-of-year accounts receivable valued RMB 336,866,126.18, 7.78% more than the beginning amount, mainly due to the transfer of reserve loans and the increase of export value. • The ending amount of other receivable reached RMB 78,660,076.20, a decrease of 10.58%, because the Company attached importance to the clearance of other current accounts and controlled irrational occupation of capital. • The end-of-year principal operating profit amounted to RMB 109,010,168.83, shrinking 29.31%, and net profit RMB 14,595,602.55, 10.9% increase, due to the following factors: - For adapting itself to market competition, the Company operated discount policy for different products. The inventories were shrunk while the price of some old products dropped. This resulted in a profit decrease of RMB 15,010,000. - The price increase of raw materials caused a profit decrease by RMB 15,250,000. - The shrunk income from real estates resulted in a profit decrease by RMB 6,470,000. - The sales shrinkage of bio-chemical products and other non-sewing machinery products caused a decrease of RMB 2,730,000 of the Company’s profit. - An increase of investment income by RMB 13,020,000. - Net land compensation income increased the profit by RMB 39,150,000. • The net-increase in cash and cash equivalents ended by RMB 390,777,963.81, RMB 313,904,376.51 more than the opening-term data. The main factor lay in the increase of cash flow generated from B shares’ additional issuance. - Net cash generated from operating activities ended by a decrease of RMB 70,251,887.79, which is mainly due to the decrease of cash inflows for price drop of products, cost increase and increase of accounts receivable. - Net cash generated from investing activities realized an increase of RMB 50,327,789.99, mainly due to incomes from land transfer and stock equity transaction. - Net cash generating from financing activities decreased by RMB 333,730,012.44, for the additional B shares issuance. 4. Influence of business circumstances, macro-policies and changes in regulations 22 On the one hand, the export-drawback rate will drop from 17% to 13% since January 2004; on the other hand, the fluctuation in exchange rate also makes influence on export performance. Because export business occupies a high proportion in the Company’s sale value, these factors affects to some extent the export department of Shanggong Co., Ltd. The manufacture of sewing machines and spare parts is an industrial sector in which raw materials cost much and human work costs little. During report year, the prices of principal raw materials such as iron, steel and wood are booming. This factor also has important effects on business operation of the Company. On May 14, 2003, Shanggong Co., Ltd. retained its title of “High and New Technology Enterprise of Shanghai” after a re-approval of Shanghai High & New Tech. Enterprise Qualification Office. Besides, the Company still enjoys favorable income-tax rate of 15% for that its formal address is registered in Pudong New Area. The stock equity acquisition of German FAG’s subsidiary undertaking, if well done, will also make significant influence on the Company’s business performance. 5. Business development programs for coming year (1) Availing China’s entry into WTO and structural adjustment of international sewing machinery manufacture sector, the Company plans to strengthen international cooperation and realize qualitative leap both in depth and in breadth through organic integration of absorbing foreign collaborators and developing international market. (2) The Company will also pay priority to build and enlarge the sale network in home and abroad. By cultivating high-level agent network and setting oversea business institutions, the Company hopes to develop cooperation with multinational enterprises (including OEM business and cooperative development of new products), and enhance its marketing occupancy with advantage of worldwide sale network. (3) Through technical transformation and full usage of current technology and equipment recourses, the Company should decrease manufacture cost, increase input-output efficiency and heighten price-performance ratio of its core products. (4) With purpose of perfecting competitive and incentive systems of human recourses, and elevating comprehensive qualification of staff, the Company plans to attract international intellectual recourses to strengthen its own product development, sale and administration ability, and make itself keep in pace with advanced international standards of sale, administration and technical development. (5) Besides, the Company will also improve continuously quality and function of existing products, develop derived products, and perfect product diversification, with final objective to promote product quality and transform traditional products to high-tech integrated products. 6. Routine duties of Board of Directors 23 (1) Meetings and resolutions done by Board of Directors in report year During report year, the Board of Directors convened six meetings. (a) The 25th meeting of the Third Board of Directors, on April 17, 2003, considered and passed , , , , , and . The meeting also decided to have 2002 Annual General Meeting of Shareholders on May 20, 2003. The resolutions were carried in and dated April 19, 2003. (b) The 26th meeting of the Third Board of Directors, held on April 25, 2003, considered and approved and . (c) The Fourth Board of Directors had its first meeting on May 20, 2003, considered and passed following resolutions: to elect Mr. Ni Yonggang Chairman of BOD, Mr. He Zhongyuan Vice Chairman of BOD, to elect Mr. Ni Yonggang, Mr. He Zhongyuan, Mr. Wang Lixi, Ms. Zhang Zongming Executive Directors; to appoint Mr. Wang Lixi General Manager; as nominated by Mr. Wang Lixi, to appoint Mr. Zhang Hengliang Deputy General Manager and Chief Engineer, Mr. Jiang Jinrong and Mr. Chen Changbao Deputy General Manager, Ms. Xu Xiaohui Chief Accountant, Mr. Zhang Yifeng Secretary to BOD, and Mr. Gu Genrong Stock Affairs Representative. Relative announcements were published in and dated May 22, 2003. (d) The second meeting of the Fourth Board of Directors, on July 21, 2003, discussed and agreed and . All related resolutions were carried in and dated July 23, 2003. (e) The Fourth Board of Directors convened its third meeting on October 30, 2003 by communication way. In the meeting were considered and passed , and . On Oct. 31, 2003, relative resolutions were announced in and . (f) The fourth meeting of the Fourth Board of Directors, gathered on Nov. 28, 2003, considered and approved , , and . The meeting also decided to convene 2003 First Provisional General Meeting of Shareholders on Dec. 30, 2003. The resolutions were published in and dated Nov. 29, 2003. (g) The Fourth Board of Directors convened its fifth meeting on Dec. 30, 2003, considered and approved . The announcement was carried in and dated January 2, 2004. (2) Fulfillment of the resolutions made by General Meetings of Shareholders During report year, the Board of Directors completely fulfilled the resolutions done by General Meetings of Shareholders and punctually finished all the works authorized by the same power organ. (a) As fulfillment of the resolution done by 2002 Annual General Meeting of Shareholders, Shanggong Co., Ltd. capitalized its reserve fund to appropriate new stock among shareholders at a ratio of 1.5:10 on basis of 2002 year-end 252,466,370 shares. On May 28, 2003, the Company announced the stock appropriation of capitalized reserve fund in and . The Company fulfilled the stock appropriation program which had June 2, 2003 as register date and June 3, 2003 as ex-right date of A shares stock equity (June 5, 2003 as B shares’ register date and June 2, 2003 as last listing date of B stock equity). (b) According to the resolution and authorization of 2002 First Provisional General Meeting of Shareholders, the Board of Directors actively prepared for the application of B stock additional issuance. During report year, the circular ZJFXZ (2003) 133 of China Security Regulatory Commission approved the Company’s application to issue B shares to elected foreign institutional investors. The volume of B stock additional issuance amounted to 100,000,000 shares at a price of USD 0.428 per share. After issuance fee, the really- raised net capital valued RMB 322,639,964.52. After the capital arriving on Nov. 20, 2003, Shanghai Zhonghua Certified Accountants Co., Ltd. verified the collected capital and published Certificate on Capital Verification No. 2003-1334. 7. Proposal for profit appropriation in 2003 (1) 2003 proposal for profit appropriation As audited by Shanghai Zhonghua Certified Public Accountants (adopting PRC accounting standards), the consolidated net profit for the year 2003 amounted RMB 14,595,602.55, including RMB 13,650,851.93 generated in parent Company. (Quoting IAS auditing report by DBO International, the consolidated net profit for the year 2003 accounted for RMB 13,988,000.) In accordance with and , Shanggong Co., Ltd. has set aside RMB 5,784,747.36 for statutory capital reserve fund and the same amount for statutory public welfare fund. The Company has also decided not to appropriate discretionary reserve fund for report year. As a result, the distributive profit generated in report year reached RMB 3,026,107.83. Together with the undistributed profit of RMB 991,046.43 and other transferred-in profit of RMB 1,130,448.75, the accumulatively distributive profit for shareholders totaled RMB 5,147,603.01. The Company had proposed to realize a profit appropriation at the end of report year. But after consideration of that Shanggong Co., Ltd. faces large demand of development funds in this critical period of M&A and technical transformation, and with purpose of accelerating the Company’s growth and assuring long-term earning of its shareholders, the Board of Directors decided to adjust the profit appropriation proposal and not to distribute dividend or bonus shares. (2) 2003 Proposal for capitalizing the reserve fund to issue bonus shares The year-end capital reserve fund totaled RMB 441,976,114.68. The Company plans to capitalize the reserve fund for issuing new shares to all the shareholders at a ratio of 1.5:10. That means a total volume of 58,550,449 shares will be distributed among the existing 390,336,328 shares, and the after-capitalization reserve fund declines to RMB 383,425,665.68. For that the capitalization of reserve fund will cause a variation of the Company’s stock capital, the Board of Directors has been authorized with the mission to handle all the related articles. This proposal still awaits the approval from the Company’s 2003 Annual General Meeting of Shareholders. 8. Other issues to be reported (1) During report year, Shanggong Co., Ltd. continues entrusting and as its information release carriers. (2) Specific accounting statements by entrusted public accountants about capital occupancy of Shanggong’s holding shareholders and other related parties (HZKZ 2004-1371): We have accepted the entrustment from Shanggong Co., Ltd. (the Company) and have audited the financial statements of the Company during the year 2003. On April 15, 2004, we expressed the Auditor’s Report HZKZ No. (2004) 0037. In line with the principles in the circular (ZJF [2003] 56) issued by China Security Regulatory Commission, and another explanation notice (HZS [2004] 11) issued by China Security Regulatory Commission Shanghai Office, the Company prepared the 26 attached and , in which the Company makes public related cases with its holding shareholder and other related parties as of 31 December, 2003. The Company itself takes the responsibility for accurate information release and the authenticity, accuracy and integrity of its contents. We have verified all related accounting sheets and related information and found no important omissions. The following specific audit document is exclusively for explanation of capital occupancy situation of the Company with its holding shareholder and related parties. Special Guaranties during Report Year RMB’000 Currently Guarantor Warrantee Relationship Sum Beginning Date Classification existing or not Subsidiary company of The Company Shanghai Shanggong Needles Co. 1,400 28-09-2003 No Joint-liability holding shareholder Subsidiary company of The Company Shanghai Shanggong Needles Co. 1,260 2003-10-09 No Joint-liability holding shareholder Subsidiary company of The Company Shanghai Shanggong Needles Co. 380 2003-10-16 No Joint-liability holding shareholder Subsidiary company of The Company Shanghai Shanggong Needles Co. 4,280 2003-11-27 No Joint-liability holding shareholder Subsidiary company of The Company Shanghai Shanggong Needles Co. 6,580 2003-12-12 No Joint-liability holding shareholder Subsidiary company of The Company Shanghai Shanggong Needles Co. 1,760 2003-12-19 Yes Joint-liability holding shareholder Subsidiary company of The Company Shanghai Shanggong Needles Co. 15,000 2003-12-30 Yes Joint-liability holding shareholder Shanghai Industrial Sewing The Company Subsidiary undertaking 15,000 2003-01-23 No Joint-liability Machines Sales General Com. Shanghai Fengjian Real Estates Subsidiary company of The Company 5,000 2003-05-29 No Joint-liability Co., Ltd. holding shareholder Shanghai Butterfly Imp.&Exp. The Company Subsidiary undertaking 6,000 2003-03-11 No Joint-liability Co., Ltd. Shanghai Shanggong Imp.&Exp. The Company Subsidiary undertaking 10,000 2003-06-17 Yes Joint-liability Co., Ltd. Shanghai Shanggong Imp.&Exp. The Company Subsidiary undertaking 3,000 2003-09-18 Yes Joint-liability Co., Ltd. Shanghai Shanggong Imp.&Exp. The Company Subsidiary undertaking 8,000 2003-02-21 No Joint-liability Co., Ltd. Shanghai Shanggong Imp.&Exp. The Company Subsidiary undertaking 20,000 2003-04-07 No Joint-liability Co., Ltd. Shanghai Shanggong Imp.&Exp. The Company Subsidiary undertaking 20,000 2003-04-10 No Joint-liability Co., Ltd. Shanghai Shanggong Imp.&Exp. The Company Subsidiary undertaking 7,000 2003-11-10 Yes Joint-liability Co., Ltd. Shanghai Shanggong Fangtian The Company Subsidiary undertaking 15,000 2003-01-20 No Joint-liability Machinery Co., Ltd. Shanghai Shanggong Enterprise The Company Subsidiary undertaking 2,000 2003-01-21 No Joint-liability Management Co., Ltd. Shanghai Shuangchong Overlock The Company Subsidiary undertaking 5,000 2003-06-30 No Joint-liability Sewing Machines Co., Ltd. Shanghai Shuangchong Overlock The Company Subsidiary undertaking 7,000 2002-12-25 Yes Joint-liability Sewing Machines Co., Ltd. Shanghai Shanggong Xingda The Company Subsidiary undertaking 8,000 2003-08-22 Yes Joint-liability Sewing Machinery Co., Ltd. Shanghai Shanggong Xingda The Company Subsidiary undertaking 1,900 2003-11-12 Yes Joint-liability Sewing Machinery Co., Ltd. Shanghai Flying Man Imp.&Exp. The Company Subsidiary undertaking 3,000 2003-08-22 Yes Joint-liability Co., Ltd. Shanghai Worldbest Enterprise The Company Other companies 10,000 2003-08-19 Yes Joint-liability Development Co., Ltd. Shanghai Worldbest Enterprise The Company Other companies 30,000 2003-09-12 Yes Joint-liability Development Co., Ltd. 27 Shanghai Worldbest Enterprise The Company Other companies 30,000 2003-06-27 Yes Joint-liability Development Co., Ltd. Shanghai Worldbest Enterprise The Company Other companies 30,000 2003-09-18 Yes Joint-liability Development Co., Ltd. The Company China Worldbest Group Co., Ltd. Other companies 30,000 2003-08-08 Yes Joint-liability The Company China Worldbest Group Co., Ltd. Other companies 50,000 2003-12-16 Yes Joint-liability The Company China Worldbest Group Co., Ltd. Other companies 20,000 2003-12-16 Yes Joint-liability Shanghai Construction Materials The Company Other companies 30,000 2003-03-14 Yes Joint-liability (Group) General Company Annual Capital Occupancy Information RMB’000 Year-begi Accumulated sum Year-e Occupying Party Relationship Accounting Item nning Reason Note nd sum Debit Credit sum Shanghai Light Industry Holding Turnover Viewing Other receivables - 580 171,200 171,780 Holding (Group) Company shareholder difficulty attachment Subsidiary of Shanghai Sewing Machine Turnover holding Other receivables - 30 2,410 2,440 Screws Factory difficulty shareholder Subsidiary of Shanghai Gongfeng Elec. Turnover holding Other receivables - 5,220 1,090 6,310 Appliances Co., Ltd. difficulty shareholder Shanghai Huaqiang Subsidiary of Turnover Sewing Equipments holding Other receivables 1,540 5,810 96,340 100,610 difficulty Factory shareholder Shanghai Jinying Sewing Subsidiary of Turnover Machine Components holding Other receivables 40 40 - - difficulty Factory shareholder Subsidiary of Shanghai Pujiang Metal Turnover holding Other receivables - 1,160 340 1,500 Articles Factory difficulty shareholder Shanghai Shanggong Subsidiary of Turnover Huaxin Precision Industry holding Other receivables - 4,610 2,340 6,950 difficulty Co., Ltd. shareholder Subsidiary of Shanghai Shanggong Turnover holding Other receivables 6,560 - 22,240 15,680 Needles Co., Ltd. difficulty shareholder Shanghai Yongde Eco. Subsidiary Turnover Other receivables 10,630 - 16,140 5,510 Development Co., Ltd. undertaking difficulty Other Shanghai Industrial Sewing Subsidiary receivables Machine Materials General undertaking RMB 1.97 Company million Attachment: Capital occupancy by holding shareholder The biggest shareholder of Shanggong Co., Ltd., Shanghai Light Industry Holding (Group) Company (with 29.78% stock equity), occupied RMB 580,000 on year beginning, the capital which has been repaid on August 21, 2003. During report year, the accumulated debit sum accounted for RMB 171,200,000 while the accumulated credit sum RMB 171,780,000. As a result, the year-end capital occupancy sum amounted to RMB 0. RMB’000 Occupied sum Period Sum of days 42,800 02.01.2003 – 31.03.2003 89 42,800 01.04.2003 – 30.06.2003 90 42,800 01.07.2003 – 30.09.2003 91 42,800 08.10.2003 – 31.12.2003 84 Total 354 28 (3) Independent opinion and particular explanation from Independent Directors on external guaranty We, as Independent Directors of Shanggong Co., Ltd., followed spirit of the circular (ZJF [2003] 56), and verified the Company’s 2003 annual external guaranty affairs. As result of our check, Shanggong Co., Ltd. has strictly standardized its external guaranties with specific guidance in line with the norms in . Till end of report year, the Company’s external guaranties totaled RMB 396,560,000, less than 50% of the consolidated net assets. All the guaranteed units fulfilled soundly their liabilities and no back accounts were found. So we expressed the opinion that the whole external guaranty of the Company is under control, without any risks affecting its further operations. Among the guaranty accounts, we found an amount of RMB 35,660,000 for two subsidiary companies of the holding shareholder. We consider it as historical problem for that these two undertakings, already transferred to the holding shareholder, were anterior subsidiary companies of the Company itself. Although the problem accounts occupied small proportion, the Company should pay high attention to the accounts and resolve them with positive and reliable method. Besides, we found no evidence that the Company had contracted guaranty for its holding shareholder, other subsidiary undertakings, any non-legal organizations or individuals. 29 Report by the Supervisory Committee 1. Work information about the Supervisory Board During report year, the Supervisory Board had seven meetings, as detailed below: (1) The 14th meeting of the Company’s Third Supervisory Board was held on April 17, 2003. The meeting considered and approved , and . The related resolutions were carried in and dated April 19, 2003. (2) The 15th meeting of the Third Supervisory Board, convened on April 25, 2003, reviewed and passed of the Company. (3) The first meeting of the Fourth Supervisory Board, held on May 20, 2003, reached an agreement to have Mr. Fan Weimin as Chairman of Supervisory Board. The resolution was published in and dated May 22, 2003. (4) On July 21, 2002, the second meeting of the Fourth Board of Supervisors considered and agreed of Shanggong Co., Ltd. (5) The Fourth Supervisory Board had its third meeting on Oct. 30, 2003, in which of the Company was considered and approved. (6) The Fourth Supervisory Board convened its fourth working meeting on Nov. 28, 2003, considered and approved , , , and . The relative decisions were published in and dated Nov. 29, 2003. (7) The fifth meeting of the Fourth Supervisory Board, on Dec. 30, 2003, discussed and agreed . The meeting resolution was carried in and dated Jan. 2, 2004. 2．Independent opinion of the Supervisory Board on business operations of the Company in 2003 30 (1) Law-abiding administration of the Company During report year, the Company convened General Meetings of Shareholders, working meetings of BOD and Supervisory Board strictly in conformity with legal procedures, and made decisions exactly in accordance with the rules fixed in . Besides these legal measures, it has established a well-designed internal administrative system and effectively executed the system with purpose of preventing management risks. No behaviors were found among the Directors or General Manager, violating laws, regulations or articles of association of the Company, nor acts infringing rights and interests of the Company and its shareholders. (2) Accounting measures of the Company Shanghai Zhonghua Certified Public Accountants expressed an independent, clean audit opinion on the Company’s statements for the year 2003 base in their audit. The Supervisory Board approved that these financial statements gave a true, objective, integrated and accurate view of the Company’s financial position and the results of its operations. (3) Utility of the Company’s collected capital The Supervisory Board checked the real utility of collected capital of the Company and agreed their identity with the capital-utility program. (Please refer to Chapter Seven for details.) (4) Acquisition and sale of assets The acquisition and sale of assets of the Company is based on equity, mutual benefit and fair price. The Supervisory Board found no behind-the-scene deals or behaviors harming the benefits of the Company and its shareholders. (5) Information about related transactions The Supervisory Board approved that all related transactions are realized under principle of fair business and no actions were found harming benefits of the Company and its shareholders. 31 Significant Events 1. Important arbitration and ligitation affairs The Company hasn’t involved in any arbitration or ligitation cases during report year. 2. Acquisition and sale of assets in report year (1) As decision of the 26th meeting of Shanggong’s Third BOD, the Company, taking Dec. 31, 2002 as evaluation basis date and the appraised value as foundation, transferred 10% stock equity of Shanghai Flying Man Imp.&Exp. Co., Ltd. priced RMB 1,180,000 to the managerial team of the company headed by Xu Xuefang, and 10% stock right of Shanghai Butterfly Imp.&Exp. Co., Ltd. priced RMB 1,560,000 to the latter’s managerial team with Yu Lili as head. The stock equity transfer was finished on April 1, 2003. As a result, the stock equity in both companies owned by the Company dropped to 80% of each one. (2) According to the resolution of the Company’s 2003 First Provisional General Meeting of Shareholders, as support to municipal construction projects, the Company transferred the land right of Tangshan Road massif (approx. 8,506 m2) to Shanghai Hongkou Land Development Center and got RMB 47,203,800 as compensation. 3. Significant related transactions during report year (1) Following the resolutions of Shanggong’s 2003 First Provisional General Meeting of Shareholders, the Company signed machinery purchase contract with Shanghai Flying Man Yah Chong Sewing Machinery Co., Ltd., agreeing to purchase 19 sets processing equipments of industrial sewing machine components. The Company fulfilled the payment of bargain price valued RMB 19,160,000 on Dec. 8, 2003. (2) As fulfillment of the decision by the fifth meeting of the Fourth Board of Directors, Shanggong Co., Ltd. transferred 94.29% stock equity of Shanghai Shanggong Needles Co., Ltd. to Shanghai Household Hardware Co., Ltd. at a bargain price of RMB 13,699,700. The Company received the whole payment on Dec. 31, 2003. 4. Claims and liabilities between the Company and related parties RMB’000 Related party Financings to related parties Funds furnished by related parties 32 Sum incurred Balance Sum incurred Balance Shanghai Light Industry Holding 577.1 0 -1,706.7 0 (Group) Co. Shanghai Jinying Sewing Machine 40 Components Factory Shanghai Huaqiang Sewing -4,272.5 1,538.2 Equipments Factory Shanghai Sewing Machine Screws -30.4 0 Factory Shanghai Gongfeng Electric -5,216.3 0 Appliances Co. Shanghai Pujiang Metal Articles -1,165.6 0 Factory Shanghai Shanggong Huaxin -4,607.2 0 Precision Industry Co., Ltd Shanghai Shanggong Needles Co., 6,560 6,560 Ltd. Total 8,138.2 0 5. Significant Contracts and their Fulfillment (1) Shanggong Co., Ltd. didn’t trust, contract or lease any of its assets to other companies. Nor did any other companies trust, contract or lease their assets to the Company during report year. (2) According to its regulations and decisions by BOD and General Meeting of Shareholders, the Company established equal-amount borrowing credit guaranty relationship with the following companies: Company Incurred date Guarantee Relationship Valid period Completed Related parties d amount or not guaranty or not RMB’000 Shanghai Construction 28.09.2002 30,000 Joint-Liability Two years No No Material (Group) General Guaranty Company Shanghai China Worldbest 11.09.2002 100,000 Joint-Liability Two years No No Enterprise Development Guaranty Co., Ltd. China Worldbest Group 29.11.2003 100,000 Joint-Liability One year No No Co., Ltd. Guaranty Shanghai Shanggong 28.09.2003 30,660 Joint-Liability One year No Yes Needles Co., Ltd. Guaranty Shanghai Fengjian Real 29.05.2003 5,000 Joint-Liability 9 months No Yes Estates Co., Ltd. Guaranty Shanghai Industrial Sewing 23.01.2003 15,000 Joint-Liability One year No No Machines Sales Co., Ltd. Guaranty Shanghai Shanggong 17.06.2003 68,000 Joint-Liability One year No No Imp.&Exp. Co., Ltd. Guaranty Shanghai Flying Man 22.08.2003 3,000 Joint-Liability One year No No Imp.&Exp. Co., Ltd. Guaranty Shanghai Butterfly 11.03.2003 6,000 Joint-Liability One year No No Imp.&Exp. Co., Ltd. Guaranty Shanghai Shanggong 20.01.2003 15,000 Joint-Liability One year No No Fangtian Machinery Co. Guaranty Shanghai Shanggong 21.01.2003 2,000 Joint-Liability One year No No Enterprise Management Guaranty Co., Ltd. 33 Shanghai Shanggong 22.08.2003 9,900 Joint-Liability One year No No Xingda Sewing Machinery Guaranty Co., Ltd. Shanghai Shuangchong 25.12.2003 12,000 Joint-Liability One year No No Overlock Sewing Machines Guaranty Co., Ltd. Total guaranty incurred 476,560 Remaining sum 396,560 Including: related parties guaranty 35,660 Total guaranty for subsidiary undertakings 130,900 Total illegal guaranty 0 Guaranty proportion in net assets 46.12% (3) During report year, the Company did not trust others to fulfill management of its cash assets, nor did it continue to fulfill any cash assets trust contracts signed in anterior periods. 6. Significant undertakings Neither the shareholders who individually hold 5% or more of the Company’s shares, nor the Company itself, released undertakings in entrusted newspapers or authorized Internet sites. 7. Contracts of accounting firms During report year, the Company re-contracted Shanghai Zhonghua Certified Public Accountants as domestic auditor for its annual financial statements. The year 2003 is successively the tenth year that Zhonghua works as Shanggong’s domestic auditor. In current year, the Company paid RMB 460,000 to Shanghai Zhonghua Certified Public Accountants as auditor fees (RMB 300,000 in anterior year), and covered RMB 11,400 for current-period accommodation fee (RMB 9,500 in anterior period). According to the decision of 2003 First Provisional General Meeting of Shareholders, the Company didn’t re-elect PricewaterhouseCoopers Certified Accountants, HK as international auditor and chose BDO International as its new foreign auditor. In 2003, Shanggong Co., Ltd. paid RMB 500,000 and RMB 100 to BDO International respectively as auditor fees and as accommodation fee (in 2002 RMB 667,500 and RMB 117,600 paid to international auditor as auditor fees and as accommodation fee). 8. During report year, the Board of Directors, the individual Directors, or the Company itself, hadn’t received any check, administration punishment or notice of criticism from China Securities Regulatory Committee, nor been publicly condemned by Shanghai Stock Exchange. 9. Other significant events 34 With approval of CQ (2003) 68 of State Financial Ministry, Shanghai Light Industries Holding (Group) Co., Ltd. transferred 15,934,978 state shares, at price of RMB 4.46 per share, to China Great Wall Assets Management Co., Ltd. (7,399,104 shares) and Shanghai International Trust and Investment Co., Ltd. (8,535,874 shares). The transfer was announced in and dated March 11, 2003. 35 Financial Statements by Domestic & International Auditors Domestic Auditor’s Report Huzhongkuaizi (2004) No.0037 To the shareholders of Shanggong Co., Ltd. We have accepted the entrustment from Shanggong Co., Ltd. (the Company) and have audited the accompanying balance sheet of the Company as of 31 December 2003 and the related consolidated cash flow statements, profit / loss and profit distribution statements for the year then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with PRC Independent Standards on Auditing for certified accountants and made sure the exclusion of any important omissions. Our audit included paper and on-spot check of all the proofs supporting financial statements and documents, the adoption of accounting policy and standards, significant estimations and the overall reflection evaluating the accounting statements. As a result, we take the assurance that our audit offers reasonable basis for our opinion. In our opinion, the financial statements, according with the regulations of “Accounting Norms for Enterprises” and “Accounting System for Limited Companies”, give a true and fair view of the financial position of the Company as of 31 December 2003 and of the results of its operations and its cash flows in all significant aspects for the period then ended. The measures are following the consistent principals for accounting. Shanghai Zhong Hua Certified Public Accountants PRC Certified Public Accountant Lin Dong Mo PRC Certified Public Accountant Li Wen Xiang Shanghai, PRC, 15 April 2004 36 International Auditor’s Report REPORT OF THE AUDITORS TO THE SHAREHOLDERS OF SHANGGONG CO., LTD (Incorporated in the People’s Republic of China with limited liability) We have audited the accompanying consolidated balance sheet of Shonggong Co., Ltd. (the “Company”) and its subsidiaries (the “Group”) as at 31 December 2003, and the related consolidated income statement, total changes in equity and cash flows for the year then ended which have been prepared in accordance with International Accounting Standards. These consolidated financial statements set out on pages 2 to 36 are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as at 31 December 2003, and the results of its operations and its cash flows for the year then ended in accordance with International Accounting Standards. BDO International Certified Public Accountants Shanghai, China 15 April 2004 37 SHANGGONG Co., LIMITED Consolidated Income Statement For the year ended 31 December 2003 2003 2002 Notes Rmb ’000 Rmb ’000 Turnover 4 858,666 699,347 Cost of sales (750,199) (570,321) Gross profit 108,467 129,026 Other operating profit 5 98,791 26,448 Selling expenses (28,530) (24,624) Administrative expenses (121,917) (83,545) Profit from operations 56,811 47,305 Finance costs 6 (37,406) (30,287) Share of results of associates before tax (844) 2,608 Profit before taxation and abnormal gains 18,561 19,626 Abnormal gains 7 1,379 - Profit before taxation 8 19,940 19,626 Income taxation 9 (5,090) (5,589) Profit before minority interests 14,850 14,037 Minority interests (862) (1,037) Net income 13,988 13,000 Basic earnings per share 10 Rmb 0.047 Rmb 0.051 The explanatory notes form an integral part of these financial statements. 38 SHANGGONG Co., LIMITED Consolidated Balance Sheet As At 31 December 2003 Notes 2003 2002 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Non-current assets Intangible assets 11 104,233 41,834 Fixed assets 12 264,119 254,310 Construction in progress 13 9,428 9,569 Investments in associates 14 26,828 161,707 Long-term investments 15 64,829 37,105 469,257 504,525 Current assets Inventories 16 162,290 161,566 Notes receivable 70,224 52,908 Trade receivable 17 278,105 207,995 Due from shareholders 18 - - Due from associates 19 10,214 2,895 Due form related companies 20 7,818 23,591 Prepayments and other receivables 21 100,733 101,367 Short-term investments 22 411 5,889 Cash and cash equivalents 635,610 220,577 1,265,405 776,788 Current liabilities Notes payable 32,428 13,317 Trade payable 149,961 154,380 Due to the major shareholder 18 40 71 Due to associates 19 1,970 13,357 Due to related companies 20 200 1,038 Accruals and other payables 23 74,968 24,425 Provision - - Tax payable (65,182) - Bank loans 24 644,986 533,610 839,371 740,198 --------- --------- Net current (liabilities) /assets 426,034 36,590 Total assets less current liabilities 895,291 541,115 carried forward 39 SHANGGONG Co., LIMITED Consolidated Balance Sheet (Continued) As At 31 December 2003 Notes 2003 2002 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Total assets less current liabilities 895,291 541,115 brought forward Non-current liabilities Borrowings 25 (11,045) (7,400) Deferred taxation credits 26 (618) - (11,633) (7,400) Minority interests (24,303) (20,348) Net assets 859,325 513,367 Shareholders’ equity Share capital 27 390,336 252,466 Reserves 28 468,989 260,901 859,325 513,367 On behalf of the Board NI YONG GANG WANG LI XI Director Director The explanatory notes form an integral part of these financial statements. 40 SHANGGONG Co., LIMITED Consolidated Cash Flow Statement For the year ended 31 December 2003 2003 2002 Notes Rmb’000 Rmb’000 Rmb’000 Rmb’000 Operating activities Net cash flow from operating activities 29 (46,340) 27,367 Investing activities Interest received 3,956 2,566 Net cash flow from accepting donated 113 - subsidiary Proceeds from disposal of fixed assets 52,643 4,040 Proceeds from disposal of long-term 12,061 550 investments Proceeds from disposal of short-term - - investments Dividend received 1,540 1740 Purchases of fixed assets (8,878) (9,508) Increase in short-term investment (100) - Net cash outflow of disposal of subsidiary 30 13,515 - Purchases of intangible assets - - Increase in long-term investments (4,454) (362) Net cash flow (used in) / from investing 70,396 (974) activities before Abnormal gains Abnormal gains-government subsidy of 1,379 - land removal and replacement Net cash flow (used in) / from investing 71,775 (974) activities 41 SHANGGONG Co., LIMITED Consolidated Cash Flow Statement (Continued) For the year ended 31 December 2003 2003 2002 Notes Rmb’000 Rmb’000 Rmb’000 Rmb’000 Financing activities Dividend paid to minority interest (1,625) (16,596) Interest expenses (35,874) (32,699) Repayment of bank loan (707,909) - Proceeds from outside shareholders 325,526 - New borrowed bank loan 785,285 85,270 Net cash flow from / (used in) financing 365,403 35,975 activities Effect of foreign exchange rate changes (60) 50 Increase in cash and cash equivalents 390,778 62,418 Cash and cash equivalents at 244,832 158,159 1 January 20023 Cash and cash equivalents at 635,610 220,577 31 December 2003 The explanatory notes form an integral part of these financial statements. 42 SHANGGONG Co., LIMITED Consolidated Statement of Changes in Equity for the year ended 31 December 2003 Share Capital Other Accumulate Notes capital surplus reserves d losses Total Rmb’000 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Balance at 1 January 2002 252,466 368,959 19,210 (141,093) 499,542 Net income for 2002 13,000 13,000 Transfer to reserves 1,795 (1,795) Making up losses (100,592) 100,592 Others 825 825 - - - Balance at 31 December 2002 252,466 269,192 21,005 (29,296) 513,367 Net income for 2003 13,988 13,988 Transfer to reserves 11,569 (11,569) Transfer to Share capital 28 37,870 (37,870) B share issue 100,000 222,640 322,640 Others (11,986) (9,840) 31,156 9,330 Making up accumulated losses - - - - - Balance at 31 December 2003 390,336 441,976 22,734 4,279 859,325 The explanatory notes form an integral part of these financial statements. 43 SHANGGONG Co., LIMITED Notes to the financial statements for the year ended 31 December 2003 (Expressed in RMB Yuan) 1. Group background Shanggong Co., Ltd. (the “Company”) is a joint stock limited company incorporated in the People’s Republic of China (the “PRC”). The Company is listed on the Shanghai Stock Exchange. The Company and its subsidiaries (the “Group”) are mainly engaged in the manufacturing and sale of sewing machines and related spare parts. The activities of the Group’s subsidiaries are set out in Note 3 of the financial statements. The address of the Company is as follows: 12th Floor, Orient Mansion, No. 1500 Century Avenue, Pudong New Area, Shanghai, PRC. 2. Principal accounting policies Statement of compliance The financial statements of the Group have been prepared in accordance with International Accounting Standards (“IAS”). The Group also prepares a set of financial statements that comply with the PRC accounting regulations. A reconciliation of the Group’s results and shareholders’ equity under IAS and PRC accounting regulations is presented in note 35 of the financial statement. A summary of the principal accounting policies is set out below: A. Basis of preparation of the accounts The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”). This basis of accounting differs from that used in the management accounts of the Company and its subsidiaries which were prepared in accordance with generally accepted accounting principles and financial regulations applicable to enterprises in the PRC (“PRC GAAP”). The consolidated financial statements have been prepared under the historical cost convention. The preparation of financial statements in conformity with generally accepted 44 accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best knowledge of current event and actions, actual results ultimately may differ from those estimates. B. Basis of consolidation The consolidated financial statements of the Group include the financial statements of the Company and all its subsidiary companies made up to 31 December each year. The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from or to the date of their acquisition or disposal, as appropriate. All material inter-company transactions，balances and unrealized gains on transactions between group companies are eliminated; unrealized losses are also eliminated unless cost cannot be recovered. Where necessary, accounting policies for subsidiaries have been changed to ensure consistency with the policies adopted by the Group. (1) Subsidiary companies Subsidiary undertakings, which are those entities in which the Group, directly or indirectly, has an interest of more than one half of the voting rights or otherwise has power to exercise control over the operations, are consolidated. Subsidiaries are consolidated from the date on which effective control is transferred to the Group and are no longer consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus costs directly attributable to the acquisition. The excess of the cost of acquisition over the fair value of the net assets of the subsidiary acquired is recorded as goodwill. See note (G) for the accounting policy on goodwill. Intercompany transactions, balances and unrealized gains on transactions between group companies are eliminated; unrealized losses are also eliminated unless cost cannot be recovered. Where necessary, accounting policies of subsidiaries have been changed to ensure consistency with the policies adopted by the Group. Separate disclosure is made of minority interests in the financial statements. Minority interests represent the interests of outside shareholders in the operating results and net assets of subsidiaries. Details of the Group’s subsidiaries are set out in note 3. (2) Associates 45 Associates are entities over which the Group generally has between 20% and 50% of the voting rights, or over which the Group has significant influence, but which it does not control. Investments in associates are accounted for by the equity method of accounting. Under this method, the Company’s share of the post-acquisition profits or losses of associates is recognized in the income statement and its share of post-acquisition movements in reserves is recognized in reserves. The cumulative post-acquisition movements are adjusted against the cost of the investment. Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interests in the associates; unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The Group’s investments in associates include goodwill (net of accumulated amortization) on acquisition. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group will not recognize further losses, unless the Group has incurred obligations or made payments on behalf of the associate. Particulars of the Group’s principal associates are shown in note 3. (3) Related parties Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or common significant influence. C. Foreign currency translation (1) Measurement currency Items included in the financial statements of each entity in the Group are measured using the currency that best reflects the economic substance of the underlying events and circumstances relevant to that entity (the “measurement currency”). The consolidated financial statements are presented in Renminbi (“RMB”), which is the measurement currency of the Group. (2) Transactions and balances Foreign currency transactions are translated into the measurement currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies, are recognized in the consolidated income statement. 46 Translation differences on other monetary financial assets measured at fair value are included in foreign exchange gains and losses. (3) Group companies Income statements and cash flows of foreign entities are translated into the Group’s reporting currency at average exchange rates for the year and their balance sheets are translated at the exchange rates ruling on 31 December. Exchange differences arising from the translation of the net investment in foreign entities are taken to shareholders’ equity. When a foreign entity is sold, such exchange differences are recognized in the consolidated income statement as part of the gain or loss on sale. D. Impairment of assets An assessment is made at each balance sheet date of whether there is any indication of impairment of any asset, or whether there is any indication that an impairment loss previously recognized for an asset in prior years may no longer exist or may have decreased. If any such indication exists, the asset’s recoverable amount is estimated. An asset’s recoverable amount is calculated as the higher of the asset’s value in use or its net selling price. An impairment loss is recognized only if the carrying amount of an asset exceeds its recoverable amount. An impairment loss is charged to the income statement in the period in which it arises. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the recoverable amount of an asset, however not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortization), had no impairment loss been recognized for the asset in prior years. A reversal of an impairment loss is credited to the income statement in the period in which it arises. E. Fixed assets All property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment charge. Depreciation is calculated on the straight-line method to write off the cost of the assets to their residual values over their estimated useful lives as follows: Buildings 20 years Plant and machinery 10 years Motor vehicles 5 years Furniture, fixtures and office equipment 5 years 47 Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in operating profit. Repairs and maintenance are charged to the consolidated income statement during the financial period in which they are incurred. The cost of major renovations is included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. Major renovations are depreciated over the remaining useful life of the related asset. F. Construction in progress Construction in progress represents fixed assets under construction and is stated at cost. This includes the cost of construction as well as interest charges arising from borrowings used to finance the construction during the construction period. Depreciation is not provided on construction in progress until the related asset is completed and ready for intended use. G. Intangible assets (1) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of the acquired subsidiary or associate at the date of acquisition. Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included in investments in associates. Goodwill is amortized using the straight-line method over its economic useful life or 10 years, whichever is shorter. Negative goodwill represents the excess of the fair value of the Group’s share of the net assets acquired over the cost of acquisition. Negative goodwill is presented in the same balance sheet classification as goodwill. To the extent that negative goodwill relates to expectations of future losses and expenses that are identified in the Group’s plan for the acquisition and can be measured reliably, but which do not represent identifiable liabilities, that portion of negative goodwill is recognized in the consolidated income statement when the future losses and expenses are recognized. Any remaining negative goodwill, not exceeding the fair values of the non-monetary assets acquired, is recognized in the consolidated income statement over the remaining weighted average useful life of those assets or 10 years, whichever is shorter. Negative goodwill in excess of the fair values of those assets is recognized in the income statement immediately. 48 The gains or loss on disposal of an entity includes the carrying amount of goodwill relating to the entity disposed of. (2) Land use rights Land use rights are up-front payments to acquire long-term interest in land. These payments are stated at cost and amortized on a straight-line basis over the unexpired period of the rights or 50 years, whichever is shorter, net off accumulated impairment charge. In previous years, land use rights were included in intangible assets and were stated at cost less accumulated amortization and accumulated impairment charge. This change in classification of land use rights does not have a significant effect on the consolidated financial statements. (3) Other intangible assets Expenditure to acquire know-how and trademark are capitalized and amortized using the straight-line method over its economic useful life or 10 years, whichever is shorter. Intangible assets are not revalued. (4) Impairment Where an indication of impairment exists, the carrying amount of any intangible asset including goodwill is assessed and written down immediately to its recoverable amount. H. Investments The Group classified its investments in debt and equity securities into the following categories: trading, held-to-maturity and available-for-sale. The classification is dependent on the purpose for which the investments were acquired. Management determines the classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis. Investments that are acquired principally for the purpose of generating a profit from short-term fluctuations in price are classified as trading investments and included in current assets; for the purpose of these financial statements short term is defined as three months. Investments with a fixed maturity that management has the intent and ability to hold to maturity are classified as held-to-maturity and are included in non-current assets, except for maturities within 12 months from the balance sheet date which are classified as current assets. Investments intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, are classified as available-for-sale; and 49 are included in non-current assets unless management has the expressed intention of holding the investment for less than 12 months from the balance sheet date or unless they will need to be sold to raise operating capital, in which case they are included in current assets. Purchases and sales of investments are recognized on the trade date, which is the date that the Group commits to purchase or sell the asset. Cost of purchase includes transaction costs. Available-for-sale and trading investments are subsequently carried at fair value. Realized and unrealized gains and losses arising from changes in the fair value of available-for-sale and trading investments are included in the consolidated income statement in the period in which they arise. The fair values of investments are based on quoted bid prices or amounts derived from cash flow models. Fair values for unlisted equity securities are estimated using applicable price/earnings or price/cash flow ratios refined to reflect the specific circumstances of the issuer. Equity securities for which fair values cannot be measured reliably are recognized at cost less impairment. I. Operating leases (1) The Group companies are the lessee. Leases where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the consolidated income statement on a straight-line basis over the period of relevant leases. (2) The Group companies are the lessor. Assets leased out under operating leases are included in property, plant and equipment in the balance sheet. They are depreciated over their expected useful lives on a basis consistent with similar owned property, plant and equipment. Rental income (net of any incentives given to lessees) is recognized on a straight-line basis over the lease term. J. Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined using the weighted average method. The cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity) but excludes borrowing costs. 50 Net realizable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling expenses. When inventories are sold, the carrying amount of those inventories is recognized as an expense in the period in which the related revenue is recognized. The amount of any write-down of inventories to net realizable value and all losses of inventories are recognized as an expense in the period the write-down or loss occurs. The amount of any reversal of any write-down of inventories, arising from an increase in net realizable value, is recognized as a reduction in the amount of inventories recognized as an expense in the period in which the reversal occurs. K. Trade receivables Trade receivables are carried at original invoice amount less provision made for impairment of these receivables. A provision for impairment of trade receivables is established when there is an objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the carrying amount and the recoverable amount, being the present value of expected cash flows, discounted at the market rate of interest for similar borrowers. L. Cash and cash equivalents Cash and cash equivalents are defined as cash on hand, demand deposits and short term, highly liquid investments readily convertible to known amounts of cash and subject to insignificant risk of changes in value. Cash and cash equivalents are carried in the consolidated balance sheet at cost. For the purposes of the consolidated cash flow statement, cash and cash equivalents comprise cash on hand and bank deposits. M. Provisions Provisions are recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. A provision for warranty is recognized for all products under warranty at the balance sheet date based on past experience on the level of repairs and returns. N. Borrowing costs Borrowings are carried in the consolidated balance sheet at cost. Interest costs on borrowings to finance the construction of property, plant and equipment are capitalized during the period of time that is required to complete and prepare the 51 asset for its intended use. Other borrowing costs are expensed. O. Employee benefits (1) Pension scheme The Group participates in a defined contribution retirement scheme organised by the respective municipal governments where the Group companies operate. The Group is required to make contributions for its employees in accordance with prescribed rules and regulations of the pension scheme. Contributions to the scheme are charged to the consolidated income statement in the year to which they relate. (2) Termination benefits Termination benefits are payable whenever an employee’s employment is terminated before the normal retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either terminate the employment of current employees according to a detailed formal plan without possibility of withdrawal or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. (3) Accommodation benefits Contributions to an accommodation fund administered by the Public Accommodation Funds Administration Center are charged to the income statement as incurred. P. Revenue recognition Provided it is probable that the economic benefits will flow to the Group and the revenue and costs, if applicable, can be measured reliably. Revenue, probably obtained by the “Group” is recognized in the income statement as follows: (1) Sale of goods Revenue is recognized when goods are delivered at the customers’ premises which is taken to be the point in time when the customer has accepted the goods and the related risks and rewards of ownership. Revenue excludes value added or other sales taxes and is after deduction of any trade discounts. (2) Rental income from operating leases Rental income receivable under operating leases is recognized on a straight-line basis over the term of the lease. (3) Dividends 52 Dividend income from unlisted investments other than associates and jointly controlled entities is recognized when the shareholder’s right to receive payment is established. (4) Interest income Interest income is accrued on a time-apportioned basis on the principal outstanding and at the rate applicable. Q. Income taxes PRC income tax is provided at rates applicable to enterprises in the PRC on the income for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for income tax legislation, practices and interpretations thereof. Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax assets are recognized for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carry-forward of unused tax assets and unused tax losses can be utilized. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable (greater than 50%) that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. R. Dividends Dividends are recorded in the Group’s consolidated financial statements in the period in which they are approved by the Group’s shareholders. S. Government grants and subsidies Grants and subsidies from the government are recognized at their value where there is reasonable assurance that the grant/subsidy will be received and all attaching conditions will be complied with. When the grant or subsidy relates to an expense item, it is recognized as income over the periods necessary to match them on a systematic basis to the costs which it is intended to compensate. Where the grant or subsidy relates to an asset, the fair value is deducted in arriving at the carrying amount of the related asset. T. Comparatives Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current year. 53 3. Subsidiary companies At 31 December 2002, the Company had investments in the following principal subsidiaries, all of which are unlisted companies established and are operating in the PRC: Registered capital Equity RMB ’000 interest Company’s name (%) Principal activities Shanghai Shanggong Import & Export Co., 32,000 90 Provision of import and export business Ltd. Shanghai Flyingman Import and Export Co., 10,000 90 Provision of import and export business Ltd. Shanghai Shuangchong Sewing Machine Co., 12,000 70 Manufacturing and sale of sewing machines Ltd. and spare parts Shanghai Industrial Sewing Properties 5,000 90 Properties development and provision of Development Co. Ltd. consultation and management services Changsha Huari Biology and Chemical 25,000 90 Manufacturing and sales of biological and Industrial Co., Ltd. chemical products Shanghai Shangyuan Technology 6,000 70 Development and design of sewing Development Co., Ltd. machines and provision of consultation services Shanghai Sifangtongji Purified Water Co., Ltd. 10,550 60.47 Manufacturing and sale of purified water Shanghai Shanggong Jiarong Sewing Machine 4,000 55 Manufacturing and sale of household Co., Ltd. sewing machines and spare parts Shanghai Shanggong Fangtian Machinery Co., 3,000 60 Manufacturing and sale of sewing machines Ltd. and spare parts Shanghai Shanggong Xinda Sewing Machine 3,100 67.74 Manufacturing and sale of sewing machines Co., Ltd. and spare parts and provision of after sale services Shanghai Shanggong Enterprise Management 1,000 90 Sale of sewing machines and provision of Co., Ltd. management services Shanghai Butterfly Import and Export Co., 10,000 90 Provision of import and export business Ltd. Shanghai Shanggong Songda Machinery Co., 3,000 65 Manufacturing and sale of sewing machines Ltd. and spare parts Shanghai Shanggong Jiayuan Machinery & 3,000 56 Manufacturing and sale of sewing machines Electronic Technology Co., Ltd. and spare parts Shanghai shanggong asset operat &manage 30,000 90 Investing and consulting Co.,Ltd. SMPIC Corporation Ltd. 35,070 50 Manufacturing and sale of office equipment and glass products Shanghai Shanggong Needle Co., Ltd. (subsidiary of the Group at 31 December 2002) was disposed at the value of RMB13,700 thousand, which generate a gain RMB9,920 thousand. 54 4. Sales Sales are mainly made in the PRC and mainly represent the sale of sewing machines and related spare parts to customers, at invoiced value net of discounts and value-added tax. No segment information is presented as over 90% of the Group’s sales are derived from the sale of sewing machines in the PRC. 5. Other income 2003 2002 Rmb ’000 Rmb ’000 Other income: Proceeds from selling raw materials 1,051 - Rental income 6,770 (544) Interest income 3,956 - Service 344 Other gains from investments 18,308 131 Gains from disposal of fixed assets 41,146 711 Others 7,259 10,330 78,834 10,628 Other operating expenditure Provision for bad and doubtful debts (16,113) (6,051) Provision for impairment loss of inventories (3,691) (10,567) Provision for impairment loss of long-term investments (949) - Provision for impairment loss of fixed assets (45) - Loss from disposal of long-term investments 406 110 Others 435 688 (19,957) (15,820) Net income from other operating 98,791 26,448 6. Finance costs 2003 2002 Rmb ’000 Rmb ’000 Interest expense 36,334 30,133 Net exchange losses 68 154 Others 1,004 - 37,406 30,287 7. Abnormal gains 2003 2002 Rmb ’000 Rmb ’000 Net government subsidy of land removal and replacement 1,379 - 8. Profit before taxation 2003 2002 55 notes Rmb ’000 Rmb ’000 Included in the profit before income tax are the following revenue items: Operating revenue 4 858,666 699,347 Other income 5 78,834 10,628 Total revenue 937,500 709,975 Profit before income tax is arrived at after charging the following expenses: Other operating expenses 5 (19,957) (15,820) Interest expenses 6 36,334 30,133 Less: Transfer to construction in progress - - 36,334 30,133 Exchange loss 6 68 154 Depreciation of fixed assets 12 32,589 36,112 Amortization of intangible assets 11 12,115 2,904 Staff costs: - Wages and salaries 40,555 56,232 - Retirement costs (defined contribution fund) 4,652 1,599 - Accommodation benefits - 11,278 45,207 69,109 9. Income taxation Pursuant to relevant PRC tax regulations, the income tax rate applicable to the Company is 15%. The Group’s subsidiaries are subject to tax rates applicable to enterprises in the PRC. 2003 2002 Rmb ’000 Rmb ’000 Company and subsidiaries 5,016 5,045 Share of taxation of associates 74 544 5,090 5,589 10. Earnings per share Earning per share is calculated by dividing the net profit attributable to shareholders for the year ended 31 December 2003 of RMB 13,988,000 (2002: RMB 13,000,000) and the number of 298,669,661 “A” and “B” shares in issue (2002: 252,466,370 shares) during the year. 11. Intangible assets Land use Goodwill Trademark rights Know-how Total Rmb ’000 Rmb ’000 Rmb ’000 Rmb ’000 Rmb ’000 56 Original value: At 1 January 2003 7,100 20,160 19,382 1,200 47,842 Others 84,379 - (1,405) - 82,974 Additions 20 - 845 12 877 Disposal - - - - - At 12 December 2003 91,499 20,160 18,822 1,212 131,693 Amortization: At 1 January 2003 1,689 3,023 1,035 261 6,008 Others 12,569 - (2,325) (907) 9,337 Amortization (note 8) 9,148 2,016 787 164 12,115 Written back for the year - - - - - At 12 December 2003 23,406 5,039 (503) (482) 27,460 Net value At 1 January 2003 5,411 17,137 18,347 939 41,834 At 12 December 2003 68,093 15,121 19,325 1,694 104,233 Bank loans RMB 23,470,000 are secured on Land use rights .(note 24) 12. Fixed assets Buildings Machinery Motor Furniture Total and vehicles and office equipment equipment Rmb ’000 Rmb ’000 Rmb ’000 Rmb ’000 Rmb ’000 Cost: At 1 January 2003 174,480 436,330 14,508 25,519 650,837 Other 37,765 18,315 6,873 (7,570) 55,383 Addition 10,410 24,582 1,813 571 37,376 Transfer from construction in progress - 1,750 - - 1,750 Disposal (27,299) (15,317) (2,364) (1,798) (46,778) At 12 December 2003 195,356 465,660 20,830 16,722 698,568 Accumulated depreciation: At 1 January 2003 51,694 243,732 10,030 10,667 316,123 Other 10,840 15,020 3,240 1,787 30,887 Charge for the year 7,757 21,646 1,626 1,560 32,589 Written back for the year (13,978) (10,495) (1,606) (1,406) (27,485) At 12 December 2003 56,313 269,903 13,290 12,608 352,114 Provision for impairment of fixed assets: At 1 January 2003 11,199 69,205 - - 80,404 Other 1,976 - - 1,976 Charge for the year - - - - - Written back for the year - (45) - - (45) At 12 December 2003 11,199 71,136 - - 82,335 Net book value after provision: At 12 December 2003 111,587 123,393 4,478 14,852 254,310 At 1 January 2003 127,844 124,621 7,540 4,114 264,119 57 (a) The Group’s buildings are all situated in the PRC and on the land for which the Group has been granted land use rights for an unspecified period. (b) Bank loans are secured on buildings and plant and machinery to the net book amount of RMB 41,860,000 (note 24). The Company’s directors are of the opinion that the provision for impairment of fixed assets is adequate and appropriate. 13. Construction in progress 2003 2002 Rmb ’000 Rmb ’000 At 1 January 2003 9,569 9,147 other 873 - Additions 4,138 1,616 Transfer to fixed assets (1,750) (506) Transfer to others (2,977) - 9,853 10,257 Provision for impairment of construction in progress (605) (688) At 12 December 2003 9,248 9,569 No interest costs on borrowings are capitalized during the year (2002: Nil). The Company’s directors are of the opinion that the provision for impairment of construction in progress is adequate and appropriate. 14. Investments in associates 2003 2002 RMB’000 RMB’000 At beginning of year 161,707 160,854 Increase in investments - 362 other (134,006) - Share of increase in reserves 113 125 Share of results before tax (844) 2,608 Share of tax (note 9) (74) (544) Share of results after tax (918) 2,064 Dividends received (68) (1,698) Reversal of provision for impairment - - At end of year 26,828 161,707 Particulars of the associates, which were all established and operate in the PRC, are as follows: Percentage of equity interest Principal activities Shanghai Fuhua Light Industrial Machinery Co., 55% Manufacturing and sale of sewing 58 Ltd machine Shanghai Industrial Materials Trading Company 100% Sale of industrial sewing machines and related spare parts Shanghai Yongde Economic Development Co., Ltd 80% Electric equipment and parts、 construct hardware Shanghai Baoling Complete Engineering 90% Construct material equipment Co., Ltd Wuxi Shanggong sewing machine Co., Ltd 80% Nantong Shanggong sewing machine Co., Ltd 65% Shanghai Juki Sewing Machine Co., Ltd. 30% Manufacturing and sale of household sewing machines Shanghai Industrial Sewing Machine Maoqiao 54.49% Manufacturing of paint coating Paint Coating Factory Shanghai Shanggong Motor Vehicles 100% Provision of transportation services Transportation Services Company Shanghai Sewing Machine No. 4 Factory Sijing 68% Manufacturing of sewing machine Associated Factory parts Changshu Qixing Electroplate Hardware Co., Ltd. 45% Manufacturing of hardware 15. Long-term investments 2003 2002 Rmb ’000 Rmb ’000 Listed investments 27,507 27,288 Unlisted investments 38,043 9,817 Others 1,087 - 66,637 37,105 Provision for impairment of long-term investments (1,808) - 64,829 37,105 Long-term investments represent listed and unlisted investments in the PRC incorporated companies of not more than 20% of their share capital/paid up capital. Investments in listed companies represent various legal person shares in certain listed companies in the PRC. Pursuant to the Standard Opinion on Joint Stock Companies Limited by Shares issued by relevant PRC authorities, legal person shares are not transferable and not allowed to be traded on the stock markets except with the approval of relevant authorities. Such investments are measured at cost. At 31 December 2002, available-for-sale investments other than the investments in legal person shares of the Group have neither a quoted market price in an active market nor a fixed maturity, and are measured at cost after assessment of impairment. The Company’s directors are of the opinion that the diminution provision for impairment of long-term investment is adequate and appropriate. 16. Inventories 2003 2002 Rmb ’000 Rmb ’000 Raw materials 58,592 47,264 59 Work in progress 27,891 29,860 Finished goods 106,876 116,790 Low-value consumable goods 1,259 - 194,618 193,914 Provision for impairment of inventories (32,328) (32,328) 162,290 161,566 The Company’s directors are of the opinion that the diminution provision for impairment of inventories is adequate and appropriate. 17. Trade receivable 2003 2002 Rmb ’000 Rmb ’000 Trade receivable 336,866 274,012 Provision for bad debts (58,761) (66,017) 278,105 207,995 Concentrations of credit risk with respect to trade receivables are limited due to the Group’s large number of customers, who are mainly dispersed in the PRC, cover the spectrum of manufacturing and distribution and have a variety of end markets in which they sell. Due to these factors, management believes that no additional credit risk beyond amounts provided for collection losses is inherent in the Group’s trade receivables. 18. Due from / (to) shareholders The amounts due from/(to) shareholders are unsecured, interest-free and are repayable on demand. 19. Due from / (to) associates The amounts due from/(to) associates are unsecured, interest-free and are repayable on demand. 20. Due from / (to) related companies The amounts due from/(to) related companies are unsecured, interest-free and are repayable on demand. 21. Prepayments and other receivables 2003 2002 Rmb ’000 Rmb ’000 Prepayments 48,773 50,671 60 Other receivables 75,085 77,618 123,858 128,289 Provision for bad debt (23,125) (26,922) 100,733 101,367 The Company’s directors are of the opinion that the diminution provision for prepayments and other receivables is adequate and appropriate. 22. Short-term investments 2003 2002 Rmb ’000 Rmb ’000 Security investment 411 5,889 23. Accruals and other payables 2003 2002 Rmb ’000 Rmb ’000 Advances from customers 14,624 14,608 Other payables and accrued liabilities 60,344 9,817 74,968 24,425 24. Bank loans 2003 2002 Rmb ’000 Rmb ’000 Bank loans: Secured 616,760 388,610 Unsecured 28,226 145,000 Bank loans: Due in one year 637,210 533,610 Long-term loan repaid in one year 7,776 - 644,986 533,610 (a) The bank loans include secured bank loans in a total amount of RMB 65,330,000 (2002: RMB 52,000,000). The bank loans are secured over certain of the buildings, plants and machinery of the Group (note 12) and over certain of the intangible assets (note 11). (b) Certain bank borrowings of the Group were guaranteed by the following companies: 2003 2002 RMB’000 RMB’000 Shanghai Huayuan Enterprise Development Co., Ltd.* 117,870 97,870 Shanghai Construction Material (Group) Company* 99,500 91,500 China Huayuan Group Co., Ltd.* 99,300 99,300 Shanghai Huayuan Medicine Co., Ltd.* - 20,000 Shanghai Economic Technique Investment Guarantee Company Shanghai Branch 7,225 2,000 Shanhai Jiuhe Enterprise Development Co., Ltd. 2,000 2,000 61 Shanghai Jiangfeng Industrial Trading Company - 400 Hunan Yinhai Bio-chemistry Co., Ltd. - 23,540 325,895 336,610 * The Group has provided cross guarantees for bank borrowings granted to these companies. Details are shown in note 32. (c) The bank loans RMB 103,635,000 (2002: RMB0) are pledged over export refund, bank deposit and trade receivable. 25. Borrowings 2003 2002 RMB’000 RMB’000 Bank borrowings: Secured 1,875 7,400 Unsecured 3,428 - 5,303 7,400 Other borrowings Long term accounts payable 5,742 - 11,045 7,400 26. Deferred taxation credits 2003 2002 RMB’000 RMB’000 Deferred taxation credit: 618 - No provision for deferred taxation has been made in the financial statements as the effect of temporary timing differences is not material to the Group. The amount above is recognized by one of the group’s subsidiary due to donation. 27. Share capital At 31 December 2003, the registered and issued share capital of the Company is as follows: 2003 2002 Rmb ’000 Rmb ’000 A shares of par value of Rmb 1 each issued to: State government of the PRC 124,754 117,018 PRC corporate investors 35,517 22,348 PRC individual investors 17,940 15,600 178,211 154,966 B shares of RMB 1 each issued to: Overseas investors & inland investors 212,125 97,500 390,336 252,466 62 (a) The holders of A and B shares carry equal rights with respect to the distribution of the Company’s assets and profits and are ranked pair passes in all other respects. The A shares may only be held by the PRC Government and PRC investors; the B shares may be held by foreign investors and PRC investors as well. (b) 37,869,956 shares were transferred to share capital by way of capitalization of capital reserve and 100,000,000 shares were issued to specifically-targeted subscriber. 28. Reserves and undistributed profit/(accumulated losses) Statutory Discretion Statutory public ary Capital Share Other surplus welfare surplus Accumulate reserve premium reserve reserve fund reserve d losses Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 At 1 January 2002 (141,093 59,310 290,314 19,335 8,763 9,180 1,267 ) 247,076 Net income for 2002 - - - - - - 13,000 13,000 Transfer to reserves - - - 897 898 - (1,795) - Making up accumulated losses (100,592 - ) - - - - 100,592 - Other additions 125 - 700 - - - - 825 At 31 December 2002 59,435 189,722 20,035 9,660 10,078 1,267 (29,296) 260,901 Net income for 2003 - - - - - - 13,988 13,988 Transfer to reserves - - - 5,785 5,784 - (11,569) - Making up accumulated losses - - - - - - - - Transfer to capital - (37,870) - - - - - (37,870) Issue B share - 222,640 - - - - - 222,640 Other additions 3,131 (2,782) (12,335) (4,078) (4,495) (1,267) 31,156 9,330 At 31 December 2003 62,566 371,710 7,700 11,367 11,367 - 4,279 468,989 (a) Capital reserve and share premium (i) Capital reserve comprises mainly surplus between the appraised value of assets transferred to the Company and the value of shares issued when the Company was converted from a state-owned enterprise into a joint stock limited company. (ii) Share premium represents the premium on the issue of ordinary shares. Pursuant to relevant PRC regulations, capital reserve and share premium can be used to increase ordinary shares and to reduce any losses incurred, subject to approval by shareholders at general meeting. 63 Capital reserve RMB 37,869,958 were transferred to share capital by way of capitalization of capital reserve and RMB 222,639,964.52 were increase by issuing B shares. (iii) Included in other reserve are tax liabilities and staff benefits liabilities assumed by the major shareholder. (b) Reserve funds (i) Statutory surplus reserve The Group is required each year to transfer 10% of the profit after tax as reported under the PRC statutory financial statements to the statutory surplus reserve until the balance reaches 50% of the registered share capital. This reserve can be used to reduce any losses incurred or to increase ordinary shares. Except for the reduction of losses incurred, any other usage should not result in this reserve balance falling below 25% of the registered capital. (ii) Statutory public welfare fund The Group is required each year to transfer 5% - 10% of the profit after tax as reported under the PRC statutory financial statements to the statutory public welfare fund. This reserve is restricted to capital expenditure for staff collective welfare facilities which are owned by the Group. The statutory public welfare fund is not available for distribution to the shareholders except upon liquidation of the Company. (iii) Discretionary surplus reserve The discretionary surplus reserve can be set up by means of appropriation from the retained earnings or transfer from statutory public welfare fund. Subject to approval by shareholders in general meeting, the reserve can be used to reduce any losses incurred, to increase ordinary shares or for paying dividends. Any transfer to the reserve also requires the approval of shareholders at general meeting. (iv) Transfer from profit for the year The amount transferred to the statutory surplus reserve and statutory public welfare fund shall be based on the profit after tax in the statutory financial statements prepared in accordance with PRC GAAP. (c) Profit distributable to shareholders Pursuant to a document issued by the Ministry of Finance of the PRC, the profit after appropriation to reserves and available for distribution to shareholders shall be the lower of the accumulated distributable 64 profits as determined based on PRC accounting regulations and the accumulated distributable profits adjusted according to IFRS. 29. Cash generated from operations 2003 2003 Rmb’000 Rmb’000 Rmb’000 Rmb’000 Net profit 18,561 13,000 Adjustments for: Minority interests 862 1,037 Depreciation 32,773 36,112 Provision /(written back) for bad debt (16,113) - Provision /(written back) for impairment loss of inventories (3,592) - Provision /(written back) for impairment loss of long-term investment (949) - Provision /(written back) for impairment loss of fixed assets - 688 Provision /(written back) for impairment loss of short-term investment - - Amortization of intangible assets 12,115 3,288 Net loss/(gain) from disposal of fixed assets (857) (771) Interest (income) (3,956) (2,566) Loss/(gain) from disposal of investment (7,345) (2,650) Loss/(gain) from disposal of long-term investment (10,558) 110 Interest expenses 36,334 32,699 Loss/(gain) from foreign exchange 60 (50) 38,744 67,897 Profit before working-capital 57,305 80,897 Decrease/(increase) in inventories 13,158 2,532 Decrease /(increase) in notes receivables (11,231) - Decrease /(increase) in accounts receivables (24,321) (15,566) Decrease/(Increase) in prepayments and other receivables (64,915) (17,791) Increase/(decrease) in notes payables 15,785 - Increase/(decrease) in accounts payables (34,802) 997 Increase/(decrease) in accruals and other payables 19,563 (22,088) Increase/(decrease) in tax payables (11,792) 5,589 Increase/(decrease) in provisions - - (98,555) (46,327) Cash flow from operating activities (41,250) 34,570 Income tax paid (5,090) (7,203) Net cash inflow from operating activities (46,340) 27,367 30. Net cash outflow from disposal of subsidiary During the year of 2003, the Group disposes Shanghai Shanggong Needle Co., Ltd. Net assets disposed: 2003 Rmb ’000 Cash and bank deposit 185 Inventories 7,113 65 Accounts and other receivables 38,229 Investments in associates 6,180 Real estate, works and equipment 11,189 Bank loans 30,710 Accounts and other payables 27,603 Minority interests 800 Total disposed value 13,700 Payment way: Bank deposits 13,700 Net cash outflow from disposal of subsidiary: Cash payment - Disposed cash and cash equivalents 13,515 31. Related party transactions (a) Relationships In the opinion of the directors, Shanghai Light Industrial Holding (Group) Company, a company incorporated in the PRC and which owns 29.78% of the Company’s ordinary shares, is the major shareholder of the Company. Particulars of principal subsidiaries and associates are shown in note 3 and note 14 respectively. (b) During 2003, the Group has the following transactions with related parties: 2003 2002 Kind of transaction Rmb’ 000 Rmb’ 000 Provide finance to associates 16,140 - Provide finance to related parties 167,560 81,710 Proceeds from disposal of subsidiary to related parties 13,700 - 94.29% equity interest in a subsidiary held by the Group was disposed of to a related party Shanghai Riyong Wujin Company during the year. (c) Details of balance with shareholders, associates and related parties are set out in notes18、19and 20 respectively. (d) Directors’ remuneration The total remuneration of the directors for the year was approximately RMB 1,112,000 (2002: RMB 999,000). 32. Commitments and contingent liabilities (a) At 31 December 2003, the Group had provided guarantees for bank borrowings granted to the following companies: 66 2003 2002 RMB’000 RMB’000 Shanghai Huayuan Enterprise Development Co., Ltd.* 100,000 100,000 Shanghai Construction Material (Group) Company* 30,000 90,000 China Huayuan Group Co., Ltd.* 100,000 100,000 Shanghai Huayuan Medicine Co., Ltd.* - 20,000 Shanghai Shanggong Needle Co., Ltd 30,660 - Shanghai Industrial Sewing Machine Supply and Marketing Company 15,000 - Shanghai Sewing Construction Properties Development Co. Ltd. 5,000 - 280,660 310,000 * These companies have provided cross guarantees in respect of bank borrowings granted to the Group. Details are shown in note 24. (b) At 31 December 2003, commercial paper RMB 51,000,000 of the group were discounted, and RMB 20,000,000 of which were accepted by Shanghai Union Industrial and Trade Co., Ltd, RMB31,000,000 were accepted by subsidiaries of the group. 33．Pension scheme The PRC companies within the Group participate in certain employee pension scheme managed by local governmental organizations. According to the relevant provisions, the Group is required to make contributions to local government organizations based on 22.5% (2002: 22.5%) of the basic salaries of the employees. The Group has no further liabilities other than the above contributions. 34. Impact of IAS adjustments on net income and net assets The impact of IFRS adjustments on the PRC statutory financial statements are as follows: 2003 Net profit Net assets RMB’000 RMB’000 As per the PRC statutory financial statements 14,596 859,868 IFRS adjustments (359) - Recognize loss - - Elimination of unrealized gains/loss on transaction to associates (543) (543) - Write off of capitalized expenses 294 - As restated after IFRS adjustments 13,988 859,325 35. Approval of the consolidated financial statements The consolidated financial statements were approved and authorized for issue by the Board of Directors of the Company on 15th April 2004. 67 For Reference 1. Financial Statements signed by the legal representative, chief account and accounting manager 2. Original audit report signed by the certified public accountant and sealed by the accounting firm 3. Original documentation and announcements about the Company, carried in the newspaper assigned by China Security regulatory Committee within report year If the English Version of this Annual Report involves any different meanings from the Chinese Version, the latter shall be effective. 68 Balance Sheet As at 31 December 2003 Prepared by Shanggong Co., Ltd. RMB' Consolidated Parent company Assets Item At beginning of At beginning of At end of period At end of period period period Current assets: Cash and bank 5.1 635,610,284.65 244,832,320.84 526,656,348.43 161,780,457.77 Short-term investment 5.2 410,620.00 357,488.56 410,620.00 310,620.00 Bills receivable 5.3 70,223,932.20 58,992,443.59 51,193,240.07 42,191,008.44 Dividend receivable 5,429,149.82 918,822.60 126,010.83 Interest receivable Accounts receivable 5.4 278,105,085.79 231,803,193.13 176,789,638.69 115,548,582.46 Other receivables 5.5 54,586,350.31 57,050,297.92 47,287,487.98 44,954,344.51 Prepayments 5.6 48,773,320.09 58,830,281.67 7,098,594.95 11,867,470.19 Subsidy receivable 5.7 9,932,361.65 5,523,373.39 Inventories 5.8 162,833,054.07 188,417,488.13 101,281,097.38 93,621,063.01 Deferred Expenses 5.9 44,124.66 25,362.00 Long-term investment in bonds to be expired within one year Other current assets Total current assets 1,265,948,283.24 845,832,249.23 911,635,850.10 470,399,557.21 Long-term investment: Long-term investment in stocks 5.10 158,662,883.90 183,304,517.46 339,718,977.24 328,145,270.65 Long-term investment in bonds g 5.11 1,087,500.00 87,500.00 1,000,000.00 investment 159,750,383.90 183,392,017.46 340,718,977.24 328,145,270.65 Among which: variance due to consolidation 68,093,434.46 77,223,884.20 Among which: variance of investment in stocks 68,093,434.46 77,223,884.20 Fixed assets: Fixed assets, at cost 5.12 698,568,402.34 706,405,298.42 542,908,247.36 539,452,379.68 Less: Accumulated depreciation 353,142,443.36 349,073,287.09 272,852,734.19 263,469,386.81 Fixed assets, net value 345,425,958.98 357,332,011.33 270,055,513.17 275,982,992.87 Less: Provision for devaluation of fixed assets 82,334,440.32 82,379,500.52 81,391,879.85 81,436,940.05 Fixed assets, net amount 263,091,518.66 274,952,510.81 188,663,633.32 194,546,052.82 Construction materials Construction in progress 5.13 9,248,401.61 9,837,401.56 922,127.00 953,820.76 Disposal of fixed assets Total gfixed assets 272,339,920.27 284,789,912.37 189,585,760.32 195,499,873.58 assets: Intangible assets 5.14 36,139,297.51 38,562,629.92 23,873,542.25 26,388,005.44 Long-term deferred expenses 5.15 1,028,092.74 1,878,907.36 Other long-term assets Total intangible and other assets 37,167,390.25 40,441,537.28 23,873,542.25 26,388,005.44 Deferred taxation: Deferred taxation, debit Total Assets 1,735,205,977.66 1,354,455,716.34 1,465,814,129.91 1,020,432,706.88 Consolidated Parent company Liabilities and Item At beginning of At beginning of Shareholders Equity At end of period At end of period period period Current liabilities: Short-term loans 5.16 637,210,000.00 554,740,000.00 417,520,000.00 338,020,000.00 Bills payable 5.17 32,427,980.00 16,643,340.22 28,266,568.58 16,582,000.00 Accounts payable 5.18 149,960,881.64 184,762,730.93 65,932,674.34 85,023,036.77 Advances on sales 5.19 14,623,706.77 22,993,779.61 3,771,749.90 4,805,174.58 Wages and salaries unpaid 4,151,267.77 4,588,678.54 Staff welfare fund unpaid 1,804,870.02 1,681,122.00 69,866.52 Dividend unpaid 5.20 2,811,098.91 1,977,819.38 1,532,818.86 1,532,818.86 Tax unpaid 5.21 (65,182,487.62) (53,390,037.66) (190,229.36) 3,573,855.91 Other outstanding payments 767,554.02 1,332,564.36 733,289.73 1,239,081.07 Other payables 5.22 52,877,827.71 66,885,083.17 88,633,474.33 46,377,393.61 Pre-paid expenses 5.23 142,427.45 503,641.23 Contingent liabilities Deferred income Long-term liabilities to be expired within one year 5.24 7,776,000.00 548,000.00 400,000.00 Other current liabilities Total current liabilities 839,371,126.67 803,266,721.78 606,600,346.38 497,223,227.32 Long-term liabilities: Long-term loans 5.25 5,303,279.01 13,208,279.01 400,000.00 Bonds payable Long-term accounts payable 5.26 5,742,200.66 5,355,775.90 1,474,782.00 1,474,782.00 Specific payable Other long-term liabilities Total long-term liabilities 11,045,479.67 18,564,054.91 1,474,782.00 1,874,782.00 Deferred taxation: Deferred tax, credit 5.27 617,534.78 636,535.85 Total liabilities 851,034,141.12 822,467,312.54 608,075,128.38 499,098,009.32 Minority Interests 24,303,320.15 16,996,655.44 Shareholders' equity: Share capital 5.28 390,336,328.00 252,466,370.00 390,336,328.00 252,466,370.00 Capital reserve fund 5.29 441,976,114.68 257,092,620.64 441,976,114.68 257,092,620.64 Surplus reserve fund 5.30 22,734,373.72 12,295,327.80 5,085,311.76 2,355,141.38 Including: Staff welfare 11,367,186.88 5,779,351.61 2,542,655.88 1,177,570.69 fund Unverified investment loss 5.32 (325,903.02) (7,853,616.51) Undistributed profit 5.31 5,147,603.01 991,046.43 20,341,247.09 9,420,565.54 Difference of foreign currency translation Total shareholders' equity 859,868,516.39 514,991,748.36 857,739,001.53 521,334,697.56 Total Liabilities and Shareholders' Equity 1,735,205,977.66 1,354,455,716.34 1,465,814,129.91 1,020,432,706.88 Legal representative: Ni Yonggang Financial director: Xu Xiaohui Accountant: Yang Shujing Profit/Loss and Profit Distribution Statement As at 31 December 2003 Prepared by Shanggong Co., Ltd. RMB' Consolidated Parent company During the same During the same Assets Item During current During current period of period of period period anterior year anterior year 1. Principal operating revenues 5.33 866,798,366.22 875,299,752.11 206,928,005.95 275,350,649.39 Less: Operating cost 5.34 755,986,456.20 718,595,434.09 184,166,965.74 217,103,273.56 Operating tax and subsidies 5.35 1,801,741.19 2,495,494.60 2,076.50 2. Principal operating profit 109,010,168.83 154,208,823.42 22,761,040.21 58,245,299.33 Add: Other operating profit 5.36 14,413,400.19 16,449,976.61 6,471,490.99 7,841,336.05 Less: Operating expense 28,529,753.48 30,149,229.12 4,793,490.84 6,587,378.93 Administration expense 102,490,323.93 101,560,014.31 34,720,222.89 39,850,366.73 Financial expense 5.37 35,081,971.95 33,204,628.10 27,518,673.57 23,584,399.95 3. Operating profit (loss) (42,678,480.34) 5,744,928.50 (37,799,856.10) (3,935,510.23) Add: Investment income 5.38 17,933,050.49 4,913,201.08 48,904,250.15 9,650,106.82 Subsidy income 5.39 2,518,176.16 2,087,924.99 28,656.00 Non-operating income 5.40 53,613,611.47 6,515,403.72 2,524,278.49 5,897,200.05 Less: Non-operating expense 5.41 11,354,463.70 1,211,109.10 6,476.61 447,590.75 4. Total profit 20,031,894.08 18,050,349.19 13,650,851.93 11,164,205.89 Less: Income tax payable 5,015,744.27 5,310,143.30 (611,501.03) Minority interests 779,625.50 1,086,646.16 Add: unverified investment loss 359,078.24 1,508,006.67 5. Net profit 14,595,602.55 13,161,566.40 13,650,851.93 11,775,706.92 Add: Undistributed profit at beginning of period 991,046.43 (108,612,770.37) 9,420,565.54 Transfer from other resources 1,130,448.75 100,592,155.86 6. Profit available for distribution 16,717,097.73 5,140,951.89 23,071,417.47 11,775,706.92 Less: Provision of statutory surplus reserve 5,784,747.36 2,074,952.73 1,365,085.19 1,177,570.69 Provision of statutory public welfare reserve 5,784,747.36 2,074,952.73 1,365,085.19 1,177,570.69 Fund for staff welfare and reward 7. Profit available for distribution to shareholders 5,147,603.01 991,046.43 20,341,247.09 9,420,565.54 Less: Dividend payable for priority shares Provision of discretionary surplus reserve Dividend payable for common shares Dividend for common shares capitalized 8. Undistributed profit 5,147,603.01 991,046.43 20,341,247.09 9,420,565.54 Supplements; 1. Profit from sale and disposal of invested units 10,587,686.39 10,587,686.39 2. Loss from natural disasters 3. Profit increase / decrease by accounting policy change 4. Profit increase / decrease by accounting estimation change 5. Loss in liabilities' restructure 6. Others Legal representative: Ni Yonggang Financial director: Xu Xiaohui Accountant: Yang Shujing Cash Flow Statement As at 31December 2003 Prepared by Shanggong Co., Ltd. RMB' Item Consolidated Parent company 1. Cash flows from operating activities: Cash inflow from sale of goods and provision of services 880,071,901.64 200,850,572.04 Repayment of tax received 40,171,520.06 379,418.60 Other cash inflow relating to operating activities 69,462,649.04 59,828,011.28 Total cash inflow from operating activities 989,706,070.74 261,058,001.92 Payments for purchase of goods and receipt of services 870,864,256.99 206,936,739.75 Payments to and for staff 86,674,634.58 29,608,506.42 Taxation paid 33,246,887.01 11,147,608.56 Other payments relating to operating activities 40,883,299.13 39,864,910.00 Total cash outflow from operating activities 1,031,669,077.71 287,557,764.73 Net cash inflow / outflow generated from operations (41,963,006.97) (26,499,762.81) 2. Cash flow from investing activities: Cash inflow from retirement of investment 16,427,831.01 16,066,983.22 Cash inflow from profit of investment 1,540,207.08 29,335,335.45 Cash gain of disposal of fixed assets, intangible assets, and other long-term investment 54,022,141.63 1,183,908.70 Other proceeds relating to investment activities Total cash inflow from investing activities 71,990,179.72 46,586,227.37 Cash paid for investment 4,553,665.48 28,100,000.00 Purchase of fixed assets, intangible assets and other long-term assets 8,878,312.15 1,024,744.35 Other cash paid relating to investment activities Total cash outflow from investing activities 13,431,977.63 29,124,744.35 Nets cash inflow / outflow generated from investment activities 58,558,202.09 17,461,483.02 3. Cash flows from financing activities: Absorption of investment 336,000,264.00 333,000,264.00 Among which: absorption of stock investment of minority shareholder 3,000,000.00 Borrowings raised 785,145,000.00 562,170,000.00 Other cash inflow relating to financing activities Total cash inflow from financing activities 1,121,145,264.00 895,170,264.00 Borrowings repaid 699,042,000.00 482,670,000.00 Dividend, interest and profit paid 37,499,696.10 28,209,624.74 Among which: pay for dividends of minority shareholders 1,625,264.20 Other cash outflow relating to financing activities 10,360,299.48 10,360,299.48 Total cash outflow from financing activities 746,901,995.58 521,239,924.22 Net cash inflow / outflow generated from financing activities 374,243,268.42 373,930,339.78 4. Influence of fluctuation of exchange rate (60,499.73) (16,169.33) 5. Net increase / decrease in cash and cash equivalents 390,777,963.81 364,875,890.66 Supplementary Information 1. Adjustment of net profit to cash flows generated from operations: Net profit 14,595,602.55 13,650,851.93 Add: Minority interests / loss 779,625.50 Less: Unverified investment loss 359,078.24 Add: Provision for devaluation of assets (19,749,698.14) (21,436,904.67) Depreciation of fixed assets 31,737,262.96 21,956,927.57 Amortization of intangible assets 3,278,196.13 2,844,463.19 Amortization of long-term expense 1,035,783.96 Decrease of deferred expenses (less: increase) (39,562.66) Increase of pre-paid expense (less: decrease) (361,213.78) Loss on disposal of fixed assets, intangible assets and other long-term assets (less: decrease) (862,644.84) (1,113,245.49) Loss on retirement of fixed assets 6,000.74 Financial expense 36,394,278.43 27,961,935.85 Investment Loss (less: investment gain) (17,933,050.49) (48,904,250.15) Deferred tax, credit (less: debit) (19,001.07) Decrease of inventories (less: increase) 13,157,834.54 (5,745,154.70) Decrease of receivables in operations (less: increase) (100,467,322.11) 34,062,626.91 Increase of payables in operations (less: decrease) (3,156,020.45) (49,777,013.25) Others Net cash inflow / outflow generated from operations (41,963,006.97) (26,499,762.81) 2. Investing and financing activities not relating to cash flows: Capital transferred from liabilities Transferable bonds to be expired within one year Fixed assets transferred from financing activities 3. Net increase / decrease in cash and cash equivalents: Cash and bank balances at end of period 635,610,284.65 526,656,348.43 Less: Cash and bank balances at beginning of period 244,832,320.84 161,780,457.77 Cash equivalent at end of period Less: Cash equivalent at beginning of period Net increase / decrease in cash and cash equivalents 390,777,963.81 364,875,890.66 Legal representative: Ni Yonggang Financial director: Xu Xiaohui Accountant: Yang Shujing